Biotech Values

[DewDiligence]

Re: CS report on HCV / ENTA valuation

In a report on the HCV marketplace dated yesterday, Credit Suisse forecasts peak annual sales of $2.0B for ABBV/ENTA’s 3-DAA regimen, which is about half the $4.1B figure in my valuation model in #msg-94993406.

As an exercise, I plugged CS’s $2.0B peak-sales number into my model, keeping other assumptions in the model unchanged; the effect of this is to lower the value of ENTA’s (fully taxed) ABT-450 royalty stream from $52/sh to $25/sh, which lowers the model’s bottom line figure from $81/sh to $54/sh.

In other words, using CS’s somewhat bearish sales forecast, my model still delivers a nominal price target for early 2015 that is about 2x the current share price.