Maybe or perhaps Mr Simpson has it 60/80% correct in the assessment.
Mr Clackson may or not share some of the view.
'If ponatinib peaks at $750 million in revenue, I estimate the per-share value to Ariad at around $10.50. Push that up to $1 billion (say with meaningful first-line penetration) and the per-share value jumps to $14. As previously mentioned, I don't like including pre-Phase 2 drugs in valuation, but I will make an exception here. Giving '133 $1 billion in sales about ten years hence chips in another $4 per share in value, suggesting a fair value for Ariad shares around $14.50 to $18.
I have little doubt that bulls will snort in protest. They'll say that the ponatinib sales estimates are too small (some analysts have projected over $2 billion in sales), the discount rate is too high (30%), or the presumed multiples are too low (9x on a trailing basis to peak sales). Ditto for '133.
Fair enough. After all, if ponatinib somehow does achieve $2 billion in sales, it would be worth about $28.50 per share. I just don't happen to see much benefit in getting too aggressive with any biotech stock; a little conservatism has stood me in good stead in my own experience with biotech investing. That said, I do believe Ariad is better than many of the single-digit midgets in the biotech oncology space.
All in all, then, with a fair value in the $14.50 to $18 range and a current price of $15.75, Ariad is a stock that I'll continue to watch, but have no pressing need to buy today'.
BOOM BOOM probably will not agree, but hey, cheerleaders are of another cult, usually without reason.
