Enzolytics Inc (ENZC)

[falon]

Will ENZC have a partnership/licensing or be bought out?

Don't know.

If they go the partnership/licensing route, we shareholders can grow with the company.

If they are bought out then at what price?

How many BILLIONS?

A cash buy out would be very expensive and highly unlikely if more than 10 dollars a share. I would expect some type of stock swap and a cash deal.

The task at hand would be how do one value ENZC technology?

Rounding up to 2.8 Billion shares the different price valuations are:

2.8 Billion shares at $5 would be 14 Billion Dollars

2.8 Billion shares at $10 would be 28 Billion Dollars

2.8 Billion shares at $20 would be 56 Billion Dollars

2.8 Billion shares at $30 would be 84 Billion Dollars

2.8 Billion shares at $40 would be 112 Billion Dollars

2.8 Billion shares at $50 would be 140 Billion Dollars

2.8 Billion shares at $60 would be 168 Billion Dollars

2.8 Billion shares at $70 would be 196 Billion Dollars

2.8 Billion shares at $80 would be 224 Billion Dollars

2.8 Billion shares at $90 would be 252 Billion Dollars

2.8 Billion shares at $100 would be 280 Billion Dollars

Here is a mega deal from 2019:
Bristol-Myers Squibb (BMY) is angling to become a top-six biopharma after putting up a $74 billion bid to acquire biotech giant Celgene (CELG) early Thursday.
The cash-and-stock deal initially valued Celgene shares at $102.43. The deal offered a 51% premium to the 30-day weighted average closing stock price of Celgene. It was also a 54% premium to the closing price of Celgene stock on Wednesday, Bristol said in a news release.

But the actual value of the deal will be contingent on Bristol stock. Celgene shareholders will receive one Bristol share and $50 cash for each share of Celgene. So the Bristol stock plunge will reduce the effective deal value.

How does one value ENZC?

The company itself suggests markets worth BILLIONS of dollars however what is another company willing to pay for ENZC at this stage?

ITV, produced by Enzolytics, Inc. is a brand-new specific protein for the treatment of HIV and other viral infections. For the
first time a naturally occurring strong binding with gp41 HIV-1 envelop protein “in vitro” was demonstrated.

Current market sales indicate that the majority of products show annual sales of 100 plus million, with a significant number ranging from 300 million up to 1 billion dollars in annual sales. Many of the major drug companies, have entered into partnership agreements with newcomers, or with companies in different stages of development in the research pipeline, combining current ARVs with new drug families that impact the HIV/AIDS virus through different mechanisms of action. Partnerships of this nature are a direct result of the major seven Pharmas who control a market with a potential of reaching over $ 15 billion in year 2018, prevent their control and stake in the market share from sliding, due to numerous issues, among which it is important to note, compliance to the drug regimen, adverse reactions to their chemotherapeutic agents
impacting the human organs, cost, and eventual viral resistance.

In summation our product’s differentiation is based on:

1- Minimal and minor side effects
2- Zero toxicity issues
3- Tremendous cost savings
4- Short and limited treatment cycle
5- Easier Compliance adherence
6- Zero risk of viral resistance and mutation

How to calculate the value of drugs and biotech companies
https://www.baybridgebio.com/drug_valuation.html

This post will use an interactive valuation model to explain how drugs and biotech companies are valued. I'll describe key concepts related to risk and value in biotech, provide some examples of how risk and valuation drive company strategy, and examine whether current biotech valuations are in-line with fundamentals.

The post is accompanied by two tools that can help you apply this knowledge: an interactive drug valuation calculator and an excel spreadsheet with an example of how a drug company might be valued.

Value at start of program
$0M
Probability of FDA approval: 4%

Investment required for approval: $559M

Value at start of Phase 1
$88M
Probability of FDA approval: 12%

Investment required for approval: $520M

Value at start of Phase 2
$248M
Probability of FDA approval: 20%

Investment required for approval: $486M

Value at start of Phase 3
$1,119M
Probability of FDA approval: 56%

Investment required for approval: $405M


Risk and value in biotech

Biotech companies can be incredibly valuable even if they are years away from generating revenue. We can't use typical valuation metrics to value pre-revenue biotech companies, but biotech has its own valuation principles. A few of note:

Value is closely tied to risk: In other industries, growth, either of profits, revenues, or users, drives value creation. In drug development, derisking drives value creation. Companies "derisk" their science by conducting scientific experiments or clinical studies. The more rigorous the experiment, the more value is created if the experiment is successful.

Risk is often binary: Because value creation is tied to risk reduction, and because risk is reduced through experiments and studies, a company's value often changes dramatically when new data from studies is released. Because studies are generally blinded to prevent bias, the data from a study is usually revealed all at once at the end of a study. So big swings in value can happen literally overnight. Positive binary events often catalyze a fundraise.

Drugs become exponentially more valuable over time: Drugs aren't really that valuable until around Phase 2. This is why most venture capitalists prefer to fund companies that develop their own drugs rather than just discover new targets or hits and then try to sell them to pharma. In our model, each hit is worth $2.7M and it costs $2.1M to get each hit. A Phase 2 molecule is worth $249M and it costs $74M to get to Phase 2. A Phase 3 molecule is worth $1.1B and it costs $154M to get to that point. Unless you can generate high-quality hits or leads very quickly and cheaply, you're better off taking drugs to the clinic yourselves rather than partnering too early.

Valuations are highly sensitive to discount rate: It takes a long time to develop drugs, and most of the value is created after many years, so a drug's value is highly sensitive to the discount rate. Developing drugs requires lots of capital, and because drug development is risky, capital can be expensive. So cost of capital can be one of the biggest components of the cost of drug development. Try changing the discount rate in the model below to 2% (roughly the rate of inflation). Drugs become much more valuable. As a corollary, lower discount rates can allow companies to drastically reduce drug prices. Check out this drug pricing calculator to see how discount rate affects price.