Replies to post #154192 on Biotech Values

[mcbio]

Sure, 5x is reasonable (although I backed out a 6X multiple from Merrill's report). Assuming $1 billion in revenue, ARIA is worth $5 billion on Iclusig alone. With 168mm shares outstanding, that's right around a $30 price target or 60% upside from Friday's close. Plus you get a free ride on the ALK inhibitor, AP26113 which, btw, Merrill is already valuing at $11 a share.

ARIA would only be worth that $5B market cap estimate on Iclusig once we reach that peak sales level, not today, which is presumably at least 5 years away. I realize there's still '113 but that's still really early and I'm just not interested myself at this valuation. I hope I'm completely wrong and it works out for you ARIA longs though. I may re-visit if the launch is slow and the valuation takes a hit though.

[DonShimoda]

I just realized that my post #msg-82505647 implied that Ariad's Iclusig's MMR was achieved in just 12-months. Just to be clear, the MMR data I referenced was based on 24 and 30 months for tasigna and iclusig, respectively. Unfortunately, I was unable to find an apples-apples comparison (e.g same line of therapy/same time period). However, just to put Iclusig's 51% MMR in 3/4 line in context, in a front-line setting, gleevec has a 3-year MMR of around 53%.

[zipjet]

My edited version - an attempt to synthesize DS's posts [edits] in brackets [ ]:

The key take-away for me is that Ponatinib got approved, 3-months early, with a broad, second-line label. As far as the label warning goes, have you seen Tasigna's black box label?

WARNING: QT PROLONGATION AND SUDDEN DEATHS
"Sudden deaths have been reported in patients receiving nilotinib"

By the way, NVS reported tasigna revenue of $231 million in their most recent quarter; the drug will easily exceed $1 billion in sales next year.

Yesterdays 20% drop was an over-reaction driven largely by the markets perception that Iclusig is going to meet resistance (no pun intended) in a 2nd-line setting. Given the 12-month follow-up data released last week at ASH, I think this risk is largely without merit. In a 3/4 line CP setting Iclusig achieved a 51% MMR compared with Tasigna's 28% MMR in 2nd-line [reached in 24 months]. For Iclusig, the MMR was reached in just 5.6 [30] months(the median duration of response has not been reached). [Cp. in a front-line setting, gleevec has a 3-year MMR of around 53%.] Compared with tasigna, iclusig generates a faster, deeper molecular response in 3/4 line as tasigna does in 2nd. It's not even close.

As far as peak sales go, most analysts are well north of $1 billion:

Cowen thinks "it could have over $1B in revenue at peak."

Maxim projects "global peak sales of ponatinib stay at around $1.3B."

Mike King recently wrote that "even under what we believe are conservative assumptions, we forecast ponatinib sales at $1.9 billion worldwide in FY2018."

Oppenheimer is also forecasting "peak sales of $1.9 billion ($700 million front-line/ $1.2 billion refractory)

>>"What would be a reasonable multiple on that figure, perhaps 5x sales?<<

Sure, 5x is reasonable (although I backed out a 6X multiple from Merrill's report). Assuming $1 billion in revenue, ARIA is worth $5 billion on Iclusig alone. With 168mm shares outstanding, that's right around a $30 price target or 60% upside from Friday's close. Plus you get a free ride on the ALK inhibitor, AP26113 which, btw, Merrill is already valuing at $11 a share.