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Michael Murphy, CFA

 
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  • Arena Pharmaceuticals: How Good Can It Get? [View article]
    A revenue valuation model also is not affected by SG&A and COGS. They will be around 10%, in this case. And very low taxes.
    Jun 26 12:37 AM | 2 Likes Like |Link to Comment
  • Arena Pharmaceuticals: How Good Can It Get? [View article]
    Line 10 is the obesity drug market share I am forecasting for Lorqess. Did you not see it? I assume the rest goes to Qnexa and Contrave.

    It beats me why you think a revenue valuation model has to acount for taxes, but I assume you don't realize the sale to Eisai takes place in Switzerland.
    Jun 26 12:35 AM | 2 Likes Like |Link to Comment
  • Arena Pharmaceuticals: How Good Can It Get? [View article]
    What SPECIFIC numbers in my spreadsheet do you think are wrong?
    Jun 26 12:32 AM | Likes Like |Link to Comment
  • Arena Pharmaceuticals: How Good Can It Get? [View article]
    You have been hopelessly wrong on Arena every step of the way. It isn't the headline that makes this article (and, incidentally, SeekingAlpha writes the headlines) but the SPREADSHEET. Why don't you focus on the numbers and argue about the ones you think are too high?

    Dendreon is just below the revenue track I forecast for them 20 months in advance. I don't know why Mitch Gold forecast $345 million in revenues when I was forecasting $238 million, but he killed the stock by overpromising.

    Provenge is one of the top 10 oncology launches of all time. Wait and see what happens for the next two years.

    And what SPECIFIC numbers in my DNDN spreadsheet do you disagree with? That makes for an intelligent discussion, as opposed to your constant bashing of Arena being proved wrong on every level.
    Jun 26 12:31 AM | Likes Like |Link to Comment
  • Arena Pharmaceuticals: How Good Can It Get? [View article]
    I was out all afternoon - this is the first chance I've had to respond.
    Jun 26 12:27 AM | Likes Like |Link to Comment
  • Arena Pharmaceuticals: How Good Can It Get? [View article]
    I give Lorqess only 35% of the market initially, which is their percentage of high responders in the trials. I assume the other 70% will try Qnexa or, if it is approved, Contrave. We are not likely to see another obesity drug for many years, because the FDA has made it even more difficult to get approval.
    Jun 26 12:26 AM | 1 Like Like |Link to Comment
  • Arena Pharmaceuticals: How Good Can It Get? [View article]
    I didn't buy ARNA until after the subscribers did.
    Jun 26 12:24 AM | Likes Like |Link to Comment
  • Arena Pharmaceuticals: How Good Can It Get? [View article]
    I was very disappointed with Exalgo revenues, but they are finally taking off. The Synavive data coming soon will be good, and they have some very interesting new pain drugs in Phase I. I think ZLCS is cheap at these prices.
    Jun 26 12:23 AM | Likes Like |Link to Comment
  • Arena Pharmaceuticals: How Good Can It Get? [View article]
    Shane, in addition to my answer to all of your points above, including the valuation using your low-ball figures, I need to point out that 2016 is NOT peak sales. It's just where my spreadsheet ends. I think Lorqess grows right through patent expiration in 2023.
    Jun 26 12:18 AM | Likes Like |Link to Comment
  • Arena Pharmaceuticals: How Good Can It Get? [View article]
    The percentage of the population that is overweight/obese is quite a bit lower in Europe and the ROW.
    Jun 26 12:15 AM | Likes Like |Link to Comment
  • Arena Pharmaceuticals: How Good Can It Get? [View article]
    Shane, the gross margin will probably start at 80% to 85%, but quickly ramp to 90%. The Switzerland facility already has capacity for a billion pills a year. And as I said earlier, Arena's US tax loss carryforward will not be used up, because the profits are booked in Switzerland.
    Jun 26 12:11 AM | 1 Like Like |Link to Comment
  • Arena Pharmaceuticals: How Good Can It Get? [View article]
    Shane, the great thing about spreadsheets is they create an arena for logical discussion. Which of my assumptions do you think are too high, and therefore push the revenues too high?

    I did not account for the tax rate for two reasons. First, I am valuing Arena at 6X revenues, which is what I think it would be worth to Big Pharma in an acquisition. The tax rate is not relevant to that. Second, which you may not know, is that Arena's sale of Lorqess to Eisai takes place in Switzerland and is not subject to US taxes.

    Regarding shares, the Swiss company can buy back shares in the open market to keep the share count down, just as most successful tech and biotech companies do. As you know, a successful drug gushes cash, and since the Arena insiders have no interest in diluting themselves, offsetting option grants with open market purchases is very likely.

    You asked me what it's worth at 4x sales, a reasonable tax rate, and 275M shares outstanding. That's easy to calculate from the spreadsheet. The answer is $81 in 2016, which discounts to $53 today at a 15% discount rate. Aren't spreadsheets great?
    Jun 26 12:06 AM | 2 Likes Like |Link to Comment
  • Arena Pharmaceuticals: How Good Can It Get? [View article]
    Fully diluted shares at the end of March were 164.213 million, per the 10Q.
    Jun 25 11:54 PM | Likes Like |Link to Comment
  • Arena Pharmaceuticals: How Good Can It Get? [View article]
    Yes, in April 2009 I predicted DNDN would report $238 million in gross sales in 2011, and 18 months later they reported only $228 million.
    Jun 25 11:51 PM | Likes Like |Link to Comment
  • Provenge Has A Bigger Market Than You Think [View article]
    How about adding 210 suppliers in 10 months?
    Jun 7 11:02 AM | 2 Likes Like |Link to Comment
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