Biotech Values

[DewDiligence]

GTCB valuation update:

In #msg-6745233 (from June) I said:

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With about 50M shares outstanding on a fully-diluted basis, a $4 price represents a market cap of only $200M… an unduly conservative post-approval valuation in my opinion. The IP portfolio and the European ATryn sales (which ought to reach about $75M in a couple of years) by themselves justify a valuation of at least $300M, IMHO. And this does not even include rhAAT, albumin, the rest of the pipeline, the external partnership programs such as Merrimack, or the U.S. ATryn program. In other words, I am staying long for quite a while.
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The LEO partnership removes some of the economic upside from the European ATryn program, but it removes all of the commercial (as opposed to regulatory) downside. Moreover, it allows GTC to put greater emphasis on the U.S. ATryn program, a far bigger economic opportunity on account of the lack of bona fide plasma-based competition. All told, I consider the LEO transaction to be neutral in terms of my views about GTC’s future valuation.

Due to the dilution since June, the fully-diluted share count is now almost 60M (rather than approx. 50M in the above post), so the projected stock prices must be adjusted accordingly. Nevertheless, I continue to believe that $200M is an unduly conservative post-approval valuation. Whether the post-approval valuation will get higher than this I cannot say, but I think it ought to in due course. JMHO, FWIW