Replies to post #86215 on Biotech Values

[ghmm]

I think EPIX had gotten close to a Billion dollars in Biobucks and look how much of that they got.

I saw a PR the other day about their AD trial I guess GSK gets the program for free (or there abouts).

I wonder with some of the Bankrupcies if any of the IP is worth something and someway takes a gamble (I am think of Altus but suspect there are others).

[iwfal]

Biggest license fee for ph i -

Zymo got $85 million in cash, and another $20 million license fee in 2009

Actually they will have gotten $200M in 2009 - although the initial payment was as you say, there was another $95M that was tied to what were almost slam dunk milestones (starting the ph ii).

But even if you count all of that the $170M for the pain med is actually more because it has no strings - in contrast, Zymo has to spend $100M on trial costs.

[exwannabe]

Re: "I think you are confusing biobucks and the sort of dollars issued by the Federal Reserve. "

Not so fast. ZGEN has already received another $70M which was always very likely. And of course they have your biobucks (contigent milestones). And they still have kept 40% for themselves.

It is true they are still on the hook for 20% developement costs (including the first $100m), but I think the expected value of the deal is easily way over the $170M + you are talking of.

Imagine any model BMY could put together that would justify their side. Let's make up some numbers and see what we get.

P1 = probability of phase 2 success
P2 = probability of NDA accepted (assuming P1)
C = Total Dev cost after Zymos first $100M assuming P2 study passes
E = BMYs minimum expected risk adjusted earnings (not counting dev costs, milestones, etc) needed for the deal to break even.
V = deal value to ZGEN

V = 85+70+(P1*P2*360)+E*.67 - 100 - .2*P1*C
E = 85+70+(P1*P2*360)+.8*P1*C

(This discounts to 0 the extra milestones for sales and "other indications")

P1 = 40
P2 = 30
C = 600
E = 390
V = 311

P1 = 20
P2 = 20
C = 700
E = 338
V = 307

P1 =50
P2 = 30
C = 800
E = 529
V = 383

Notice the middle case (at a mere 4% chance of success) still value the deal at over 300M even using a model where BMY makes no profit. And you can't make the P's much lower, else the sales numbers would need to get absurd to generate the needed expected E.

SO, unless BMY has their head up their ass, the Lamda deal is worth well over $300M