Replies to post #175684 on Biotech Values

[DewDiligence]

What multiple do you apply to earnings that peak early and decline over say 5 years to a fraction of the early results?

GILD, ABBV, and ENTA don’t envision such a trajectory, and neither do I; from #msg-99031302:

Although there’s a bolus of HCV patients who can be expected to seek treatment with an all-oral regimen as soon as one is approved, I don’t expect the all-oral HCV market to exhibit a parabolic boom and bust the way VRTX’s Incvek did because the number of patients treated per year is constrained by the throughput bottleneck described at the beginning of this analysis. Thus, it’s likely that the all-oral HCV market will peak relatively soon after launch and then begin a gradual decline with a robust market continuing until well into the 2020’s decade.

Given the kind of sales trajectory described above, I apply a multiple of 8x to ENTA’s $127M peak annual after-tax royalty income.

[dewophile]

no one disputes there are warehoused patients, and there likely will be a decline once this bolus of patients is treated. However, i think you are greatly underestimating the influx of treatment candidates from the already infected pool that are not currently aware of their HCV status. and contrary to what some believe - i think most will opt for treatment even if asymptomatic (i know i would)