Biotech Values

[dewophile]

zgen

"they have a good enough probability of reaching something like the $75mm level (US) and then being able to taper down S&M expense while maintaining revenues so that they can actually make some money."

i think 75M for 2010 is realistic (perhaps even conservative), and ultimatley they are likely to reach > double that - jmo. and yes, S&M should be low once the market matures - most hospitals will ultimately carry one thrombin product, and there will be little need for pull through w sales force

"At a possible annual net cash flow of $20mm (+/- 50%), would you pay more than $100mm for Recothrom right now? "

yes if you factor in future growth (see above), and ex-us royalty. bayer royalty in US also decreases markedly in 2 years and is 0 in ?4 years

"What supports the rest of Zymo's $370mm mkt cap?

1. 290 cash (assuming get lambda to ph 2 which seems a lock), only 25M debt
2. tough to put a present value on lambda. It could supplant the IN market totally if successful. that market may also grow substantially as only a small fraction of pts currently get therapy - one has to assume with improved efficacy and potentially better tolerability (right up lambda's alley) a huge bolus of pts will seek tx. that has to be weighed against duration of therpay - which could shorten w direct antivirals and cost per course of tx could decrease (although lanbda would be priced based on whatever regimen is soc at time it enters market). also there is risk of interferon being replaced with all oral cocktails. and then discount probability of success. on the plus side there are non-HCV indications to consider. so where does that leave us as far as NPV? who the heck knows. but how about using the bmy deal as a proxy - if they are willing to pay 200M for rights to 60% of the US market for the drug, how about we say its NPV is 300M? (i don't think that is a crazy number - seriously)

so forget the rest, and one can make an argument zgen is worth north of 500M

the other news items this year (il-21, ataciept in RA, other outlicensed product milestones) are just gravy as far as i am concerned. and lest we forget earlier this year williams said they are in negotiations on pipeline candidate(s) and hinted a licensing could come as soon as Q1 and/or Q2