Replies to post #76998 on Biotech Values

[jbog]

P3analayze,

When I evaluate stocks in the Biotech field I’ve learned over the years that I have to separate the “foreplay” from the “main event”. Unlike the rest of my life the “foreplay” portion is really the most rewarding while the “main event” is normally disappointment.

Let’s remember a little history. While Osip was developing Tarceva, it’s stock jumped with every event (up into the $100 range) and now that it has a great, billion dollar product out there it’s happy to hold a third of that value. Same with Onyx Pharma and Imclone prior to the buyout. Every one of those companies settled in a range of 25% to 40% of their previous highs. Genentech was no different until it was able to amass many products and then even when it sold it wasn’t at its high.

So let’s make a list of positive and negative events which could effect the stock that are possible for Dendreon prior to it’s selling the first dose:

Positive:

U.S. Partnership
ROW Partnership
FDA Submittal
U.S. Pricing Plan
Unrealistic Sales Estimates
Positive Press
FDA Acceptance
FDA ODAC (possible)
FDA Approval
Manufacturing Approvals
New Clinical Trial Scheme’s

Negative:
Stock Dilution
Cougar Pharmaceutical

As you can see Dendreon is probably only on the 2nd or 3rd step of the step ladder. As far as any partnership agreements there’s no question that Dndn has the hammer and it’ll work out something very favorable for the stockholders.

Dendreon will need more money at some point, and I can’t decide if it’ll get it thru issuing more stock or from a partnership. It’ll have an easy time either way and it’ll be a simple business decision. I would guess they wouldn’t have to sell any more than around 5mil to 7mil shares to satisfy their cash needs.

When we talk any type of partnership agreement, Dndn has amassed over $570mil in losses so I would expect them to recoup an appropriate portion of that.

Other stocks we could perform the same analysis on would be Acor, Amag and Affy. (acor’s fda approval is questionable). Over the last 6 weeks Amag has doubled and Affy is up 50%.



[DewDiligence]

Re: DNDN valuation

For the sake of argument, what do you think the valuation of Provenge alone should be, assigning zero value to manufacturing and pipeline?

I will run some numbers on this, but first let me make some simplifying assumptions:

• FDA approval and EU approval are a fait accompli.

• Potential label expansion of Provenge into early-stage prostate cancer is part of the “pipeline,” and hence excluded from this calculation.

• Peak US sales will come 3 years from product launch, which is roughly 4 years from now.

• Cash flow / cash burn between now and the time when peak US sales are realized will be a wash on a present-value basis.

• DNDN’s current balance sheet is also a wash, i.e. cash and debt roughly offset one another.

If you have a problem with any of the above assumptions, please speak up before I get started with the actual number-crunching. T.i.a.

[rkrw]

How can Miller make statements about profit margins without knowing how much dndn plans to charge/be reimbursed?

[Biowatch]

DNDN Provenge valuations

{{ >>DNDN’s manufacturing facilities would seem to be usable only for making Provenge; if this is correct, then a separate valuation for the manufacturing facilities is not warranted <<

I would think those "pods" - ie clean hoods or incubators can be used to maufacture any vaccine in Dendreon's pipeline. The company can always have GMP contractors to supply commercial grade and quantity of vaccine antigen cassette. It is labor intensive, as David published, the profit margin is a tad lower than monoclonal antibodies (75% vs 90-95%). To your point, I think I want ot agree that manufacturing facilities are less valuable than those of MoAb. }}

How easy is it to collect the patient's cells for use in DNDN's "active cellular immunotherapy (ACI)"? Will they have to go to designated phoresis centers, such as those used to collect platelets? Donating platelets often takes four hours from start to finish, and scheduling can be a concern. How many ACI collection centers will be available to Provenge patients? Can they have it done at their local doctor's office or hospital? How long do the cells last? What is the turn around time from harvest to activation to return to the patient?
http://www.acifacts.com/

As they learn more about markers (CD54? Other?) associated with better outcomes, will they decide not to return the activated cells to the patient if it doesn't look promising?

If the cells are contaminated with bacteria (as happens in a small percentage of cells harvested for bone marrow transplants), will they harvest a second batch?