Saturday, September 14, 2019 10:58:46 AM
Net Revenue [NR] (per 120 capsules (NRpC]; $)
The NR is 133*; meanwhile the WAC is 304. The difference (171), based on 10-Qs and 10-Ks is
- Trade Allowances: 17% / 29
- Rebates, Chargebacks and Discounts [RCD]: 74% / 127
- Product Returns: “0” % / “0”
- Other Incentives: 5 % / 15
(* based on ICER report … however the actual NR, based on 10-Qs is a little bit lower, app. 125).
The NR could be increased by the reduction of the RCD … and more likely, it will be the case. John Thero (Q2 CC):
Please note: it is not a NR and GM projection, it is about with and without generic “competition / treat”
If all statin users (annualized, 20M, US only) will be on Vascepa [V]
- the NR is 32 bn and the GM is 25 bn (77%) with the current NRpC
- the NR is 47 bn and the GM is 40 bn (85%) if the RCD will be decreased by 50% (=NRpC increased by 48%)
If the generics could enter (e.g. in 2029 / 2030), Amarin has to compete with them … the GM% should be decreased. If we assume that 20% GM is low enough to avoid generic competition the NR will be 9 bn and the GM will be 1.8 bn (20%). (… with 10% GM the GM will be 0,8 bn …).
Please note: the GM is BEFORE any cost other than COGS
Valuation of the Co. (= valuation of V)
(i) the company is in the development phase
(ii) V (economic) lifecycle isn’t endless, if it has to compete with generic it does not have too much value
Due to these a potential buyer:
- won’t make an offer as actual pps + x% premium ("premium" will be calculated AFTER the offer)
- won’t make an offer as X times NR or GM or EBITDA or anything
- won’t make a valuation based on Amarin (current) number / structure
- will consider the next (max) 10 years (till 2029 / 2030) only
- will make an own projection for NR, GM and EBITDA, etc. … and will discount it (NPV; risk due to assumptions)
Amarin vs BP
NR: both version could deliver the “same” revenue … but more likely BPs think that they could generate more. (RoW: BP could make more due to existing operation and “GIA”, meanwhile Amarin will receive a double digit royalty, max: 25-30%)
COGS: the same
Cost: BP will have less cost due to
(i) a lot of cost will be an incremental only
(ii) lot / some expenditure won’t be necessary since “functions / elements” exist already
(iii) the have a bigger volume … could get a bigger discount
All together: BP could generate higher bottom line over the years
GIA vs BO
GIA: additional indication (if any) could be monetized … but has a risk(s)
BO: eliminate all future risks
I am not for GIA or for BO, however I think Amarin will receive an offer - which will be recommended by the BoD - and a deal will be done.
RELAX … less than 62 days till the opening bell on November 15.
Best,
G
"There are some things money can't buy. … For these, there is AMRN."
Disclosure: I am long with this stock. I wrote this post myself, and it expresses my own opinions (IMHO). I am not receiving compensation for
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