I post only rarely, and have no medical expertise whatsoever, but I have been investing in biotech stocks for about a decade and have been in and out of NWBO over the past six years.
A lot of people are posting messages about what they expect the stock price to do over the coming weeks and months remaining in 2020. While I'm very, very long on NWBO I think a lot of people are getting ahead of themselves and I think we should be careful.
First, we have about 1.2 billion fully diluted shares outstanding. There is absolutely no reason when talking about upside to start a projection by assuming anything less. In fact, when talking about upside, we should probably be talking about 1.5 billion shares because additional equity will be issued to raise money for the FDA filing and launch preparations.
Next, if we go with Larry Smith's estimate of the GBM market globally as $10b/annually, then I think we might assume 20% of that as a reasonable target to achieve in the next 5-6 years or so. If we assume this business will be high margin and have some additional growth opportunity, then say a six multiple of revenue could apply. So, that's $12b in market value or $8 per fully diluted share five years from now.
In my view, I could see NWBO having a $1b+ valuation after the study is locked but before results are announced. To me, that looks like a share price in the $.80 to $1.00 range with maybe a little bit more upside for the Direct product which although it is being minimally valued by the market now, is leveraged to DCVax-L since they are similar products. Positive results would seem to get us a doubling from there which after a big raise would likely leave us with a $3b market cap going into the PDUFA in the middle of 2021. That's a pretty darn good number in my view given that you can NEVER count on the FDA. Every follower of NWBO should be well aware of this.
So, to the point of my note. If we do see a significant short squeeze in the next couple of months and the share price gets to $2 or $3 before news, that'd be a gift for long suffering longs that should be taken advantage of to at least cover one's cost basis. Every shareholder should be making plans based on their own situation. Also, do realize that the attack on the stock likely will not end even with wildly positive results in July. I have little doubt that even with very positive results that the stock will come under repeated attack over the next year and even beyond a positive FDA approval. I'm sure in 2021 we'll be flabbergasted as we are now as to why the stock price is relatively low despite the vastly improved position of the company.
So, incorporate that into your plan as well and be disciplined about sticking with your plan especially if all goes well.
