Replies to post #220440 on Biotech Values

[DewDiligence]

ENTA—The real disappointment probably was Abbvie's slowdown in [HCV sales]...

This shouldn’t have been a big shock to anyone insofar as ABBV had guided to $3.5B in 2018 HCV sales on its April CC (#msg-140324864). $3.5B is less than the $3.7B (4x$919M) annualized run rate in 1Q18, so a QoQ decline in HCV sales at some point during 2018 was already baked into the guidance.

[Rocky3]

You almost have to run some average yearly rate rather than the Q to Q numbers. Probably somewhere in the high 14% to 15% percent would work.

Agreed as to yearly average. But I come up with slightly different percentage.

I used $3.5B of sales, all Mav, so ENTA has royalty on ~1.75B. May be low in '18 and probably high in '19. Te$50M + $30M + $35M + $127.5M = $242.5M is the annual number. $242.5M/$1.75B = 13.86%, or 6.93% of total sales by ABBV. Per quarter on equal basis would be $60.6M. If expenses $35M, income would be $25.6M before tax. If 20% tax, $20.5M after-tax or right at $1.00/sh. Current rate of tax is less than 20%, so upside if current rate maintained. Last quarter expenses under $35M, but not by much, and almost all companies increase expenses, not other way around.

Where is my mistake(s) if any?