Bio Vantage

Bio Vantage
Contributor since: 2012
Company: Biovantage Investments
You are right that we did not include sales from off-label uses. We used more conservative revenues numbers to derive intrinsic value so as to avoid erring on the downside.
You may be right that the drug could be used off-label. We used more conservative revenues numbers to derive intrinsic value so as to avoid erring on the downside.
You are right. The current revenue projection assumes that ACAD has no corporate partner. If ACAD could find a partner, the sales rate could improve significantly, thus increasing stock valuation.
No. I assume that the ADP indication will be approved beyond 2017, thus excluded in the revenue projection.
You are absolutely right on your comments. The $150 million of incremental profit refers only to Q1 earnings (Nov-Dec 2012). iPad mini's potential will reach far beyond 2012. We are working on a report on AAPL's stock valuation and will integrate the revenue growth of its products into 5-year projection.
If you read any of the big pharma's annual reports, you will find that they all have dozens of litigation or lawsuits going on all the time. The costs have become part of their operating expense and have been factored in our valuation model. We will have a final valuation report for Pfizer out soon. Stay tuned.
We will post another report on Pfizer's valuation. We think its fair value is $27-28. So, there is not a great upside from here. If you are looking another pharma stock to replace Pfizer, we would recommend JNJ (Johnson and Johnson). Its current fair value is $81 and likely to continue to go up, based on our analysis. Please read our JNJ piece at Seeking Alpha:
It's hard to guess how the market will behave in the near term. But a correction of 5% or more is possible. JNJ will report Q3 earnings in October. The earnings may not look good, given the $350M Alzheimer drug write-off. So, there may be a buying opportunity. I would think a price below $65 is a good starting point.
There are several ways to assess a company's management. One is to look at their financial performance. The other is to listen or read annual report to gauge their business strategies and how well they execute those strategies. If you suspect that management is not doing a good job, then you could also assign higher required rate of return (r) in the valuation model. In essence, a higher r suggests a greater business risk and brings down the company's value.
It's been corrected to Part 4.
We may do an analysis on PFE soon. Stay tuned.
If you want to know where JNJ's revenue growth will come from, please read our reports on JNJ.
Glad to hear that Yervoy works for you. Indeed, immunotherapy like Yervoy is a revolutionary therapy in cancer field. We would expect BMY to expand Yervoy to other cancer types. In addition, BMY is developing another cancer immunotherapy (anti-PD1) similar to Yervoy. We will write reports on BMY and on cancer immunotherapies in general. Please keep an eye on our reports.
If the company needs to fund the trial by issuing more common stocks, it will increase outstanding share counts. As a result, the current shareholders percentage of ownership will be reduced. We have seen cases where a company issued 30% more of its stock, and the stock price plunged 20%.
Thanks for clarifying the REDUCE-IT enrollment number of 8000, not 18000, which referred to Epadel clinical trial size.
Yes, Part 4 contains financial projection, earnings forecast, and a summary of stock valuation. It will be published this week.
Nice observation. I think NVS has started its innovation years ahead of JNJ, which may explain its superior run over 10-year period. JNJ has recognized this in 2009 with their pledge to launch 11 products between 2011 and 2015. We believe those new drugs will contribute to sustained growth in the future.
In order for a prescription drug to be marketed in a country, it requires the approval from the country's regulatory agency. Since Amarin's AMR101 is approved by FDA, it can be marketed in the US. If AMR101 also gets approval by the EMA, then it can be sold in European countries. Another important factor is patent protection. Without patent protection, other companies can make me-too products and take away market shares. To be conservative in our valuation, we only use the US sales figures in the estimates.
Thanks for you comment.
Thanks for clarifying the patent and NCE issue. We will check it out on Streetinsider.
Thanks for clarifying the patent and NCE status. It's very important.
Thanks for your comments and glad you like it.
Thanks for the correction. It makes a huge difference :)
Hi there. I admire that you are a long term AMRN investor. We are too. No offense here. We also "wish" the company could be bought sometime soon. But please be realistic. Deal making takes some efforts and there is a great uncertainty in the future that you just cannot bet on it entirely. We try to put a very conservative scenario in our valuation, because we do not want to overshoot base on pure speculation. If you think you know this company inside and out, why don't you write an article to share with us.
Thanks for your comments. We try to provide high quality reports based on facts and conservative forecasts.
Thanks for your comments.
Thanks for your comments and a good insight into the patent portfolio. Why do you think Pfizer might be tempted to buy Amarin? We are curious to find out who could be potential acquirer.
Our valuation is based on discounted free cash flow model. Here, we use comparable companies (described in the article) to get an average net profit margin (ranging from 20-25%). We then assume the company will spend 10% in capex and working capital. Once you subtract net income with the capex and working capital, you get the free cash flow. We then use a conservative discount rate of 15% (for a small cap, low valuation company) to calculate the present value of FCF for all years based on the revenue projects described in the article. As you can see, our number is relatively conservative (high discount rate, revenue projection at lower side). If the company improves sales or have higher net profit margin, the valuation will be higher.
Thanks for your comments. We try to provide high quality reports based on facts and conservative forecast.
Good call. It protects you from downside while capturing the price volatility.