Obviously several assumptions will have to be made to make a reasonable projection as the potential market capitalization. The first assumption is that the product does work in humans as anticipated. We know that there are about 17 million shares outstanding. And we know that companies with fast growing revenues usually command high PE ratios so we assume a reasonable PE of 20. The primary questions remaining are: What is the total market for the treatment and what will the treatment cost? Let’s look at some options.
1. There are 17,000 people in the US waiting for a liver transplant and that number is growing. Most of them will die waiting because there are not enough livers to go around. If we assume that only 20% (3400 people) per year take the treatment and it nets GALT $20,000 per, we see a market cap of $1.36 billion. That equates to a share price of $80. And this is just the US market. (I think the $20,000 number is certainly reasonable considering that a liver transplant costs hundreds of thousands of dollars and the alternative is death.)
2. According to the recent PR from the company, there are 15,000,000 people in the US with NASH. If we assume that 10% (1.5 million people) per year take the treatment and it nets GALT $5,000 per, that calculates to a market cap of $150 billion. That equates to a share price of over $8,800. Again, this is just the US market.
3. If you think that last scenario was too rosy, we’ll tone it down a bit. Let’s assume that only 5% per year of that 15 million people get the treatment and GALT only nets $1,000 per. That’s still a $15 billion market cap or $880 per share. Again, this is just the US market.
The eventual market for the treatment will be decided by “the powers that be” who determine what the “standard of care” is for NASH and the various other diagnoses of liver disease. I would hope that the “standard of care” would dictate that liver problems be addressed at an early stage in order to head off liver scarring and cirrhosis. However, if they decide that GALT’s treatment will be used as a last ditch effort to keep you from having to get a liver transplant, then option #1 above is more likely. And it could be that the treatment starts as a “last ditch effort” but then becomes an early intervention after a couple more years of study.
Other factors not incorporated in this assessment include; the possible use of GALT’s products to address fibrosis in other organs and its use in cancer treatments.
And of course all this is JMHO…
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