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I wanted to put some figures to our possible future sales here:
100 000 treatments at £2000 per treatment is £200 million (while current market cap is £370ish million). Then the share has to go up by a Price Earnings multiple, currently in pharma 20 times p/e is normal. So company should be valued at £4 billion after just one sale. The price should therefore go up around 11 times, from the current 174p.
Takeover:
Anyone in this industry including the American government can see that buying the whole company, even at 300-400p per share is the best way to get value, over just buying our product/drug.
Realistically:
If the price holds up, so that we can realise double or more, from current price. (2 to 4 times current)
If we get lucky:
It goes up 10x on the first sale, then get taken over for around double that. So 20x current value.
Practically:
I think the U.K. government has a secret stake 15-30% because this drug buy a U.K. company is too important for the NHS to allow a foreign company to takeover. This company did raise something like £80 million in one day, right!? Interesting that this shareholder is not listed in the majority shareholders, because £80 million didn’t come from 80 million individuals, in one day. I speculate that they have enough to prevent/block a takeover, so that they can buy the company themselves or agree a future supply deal in advance of them allowing the takeover.
Conclusion:
We should make anywhere from double current share price to 20x current price. There is no way we are getting bought out above 20x - there is too much money to be made in this product/drug and pharma has too much cash on their books, not bother. (Have a look at how much cash the top 4 pharma companies have laying around making 1% interest in a bank account). It makes no sense to have £1-9 billion just laying there, when there is so much future value in our company. 20 years of patent protected value and a global pandemic with daily new variants on a rampage.
Question ... and I have researched this avidly on all levels, but do you think it has s as my chance of failure ? And is so what ?
What’s your figure ?
Think the is slightly wrong here. 100,000 treatments and £200M revenue is PER MONTH. P/E ratio is based on the annual figures ie 200M x 12 = 2.4B. But p/e is also based on the profits, not just the revenue. So maybe not quite 20 x the full 2.4B as we will have expenses. But whichever way you look at it the figures are huge.
So... if the margin is say 50% then we're talking £1.2bn pa profit, or £6 per share dividend. If that is the case, and it is sustainable, then we really could be talking about an SP north of the £50 bull valuation by Numis... Nice!!
If everything came good, US approval and use, stockpiling to level of Tamiflu etc you can build a case to £160 per share or £32 billion, but we will have partnered and licences out long before then- RM has confirmed he’s already having those meetings
So what are the possible sticking points ? I believe we have cleared them all but I am seeking your opinion
1. The trial has to be a success, the bar has been set pretty low here so 50% effective will be great.
2. We have to be able to manufacture in high volume at low cost to protect margin.
3. We need approvals and orders.
Get those 3 and we are quids in.
The company then changes from a science / trials venture into a commercial operation and will need to evolve accordingly. To maximise shareholder value this will be critical.
Big one is phase 3 approval.
The 100k per month was when we had manufacturing only with Catalent, but we’ve also signed a manufacturing deal with Thermo Fisher in US, so we’re good to go when that approval comes through. Aerogen who manufactures nebuliser also scaled up.
Adding Thermo Fisher to the mix, 100,000 US, 100,000 Europe.
200,000 treatments per month x 12 months, x 1,300 (65% profit margin) x 10 (forward multiple)
÷200,000,000 shares in issue = £156 per share without licensing agreements
But Richard Marsden has already said long term he will licence out drug to partner, so we would likely get a lump sum and then a % royalty on future revenue
Org, as you know, we could discuss stockpiling and speculate on future case numbers and vaccine efficacy until the cows come home, but it's a bit pointless, all I can say is that I'm fully confident in the government's (ours and abroad) ability to mess this up from here, I don't believe We have this beat just because case numbers are falling on our tiny island.
Org for sure I think your making a good point. But regardless of cases, SNG seems to be expecting to sell a lot of treatments based on government stockpiling. Nobody knows how much stock we have to sell but I recon whatever we have USA will buy the lot on any approval.
Org, I'm with you up to a point. A few weeks ago some on here were predicting closer to a million treatments a month and imo that's pie in the sky. 100k treatments a month is very possible however we don't even need it to be that high to see your share price target smashed.
50k treatments a month at ~£1k treatment = £50m a month/ £600m a year. Factor in the potential for stockpiling, increased orders in countries where dangerous variants spring up and the potential as a broad spectrum anti viral and the company will be worth £2b+ (£10+).
If you want to be ultra conservative keep a figure of 50k treatments a month across the US and Europe and you might realise you have nothing to worry about.
If RM sells 700k treatments a year at £700 per treatment
How much is a company worth with revenue of £490m
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Let's say super conservatively that it would value sng at £10 a share, £2b mcap. Upside 600% rise, downside 70% fall, with a greater chance of the upside? Compelling risk/reward for sure from this level.
I appreciate my valuation was heavily swaying to the rampy side, but those figers arnt too far beyond the realms of possibility, the truth is I'd be happy with 10% of that.
While I agree with your caution, Chris, and my figures are also grounded, I think it's worth stating we don't know how high our sales will go. While 100k a month is likely, multiples of that is eminently possible. All an open question till we know more.
Putting a value on this now is near impossible, there are too many unkowns. However RM was of the opinion that SNG001 was a >$1bn per annum drug for COPD, taking this and adding in COVID and stockpiling we should be able to see annual sales well north of this medium /long term. Lot needs to happen first, but this in broad terms is the potential. A valuation of 10x sales would not be unreasonable in this scenario, in maybe 18-24 months time. Most likely to realise a lower sum but sooner in my view. Whatever, all big numbers from where we are sitting now. Thoughts of a valuation of only £10 per share are rather unduly pessimistic I think, but many will sell at that point of course and be delighted. Holding a large stage right the way through will take monumental conviction.
I don't think anyone can say it's any more or less accurate to estimate sales at 100m or 1m a month - nor can we be sure about the sale price nor the market penetration nor the competition nor our costs nor how long that might be sustained - we simply have no idea.
Yet I still love these dreamy posts cos I get the chance to plumb the figures into my portfolio spreadsheet and start divvying up the windfall - my Tesla coming first of course, before the new kitchen and paying off the kids uni debts!! :-)
I have monumental conviction. :-)
I'll be holding till the sweet final offer. I won't even start carving up my prize until the SP hits £10. By carving up I don't mean selling, just planning how to divvy it up when the final price (which, for me, is £45) is reached.
Onwards and upwards!
EP
The Eli Lilly market cap. has risen by £50bn since it was awarded EUA by USA for the monoclonal antibody Bamlanivimab in early November. For Synairgen to do that equals a share price of £51.7.
"The Eli Lilly market cap. has risen by £50bn since it was awarded EUA by USA for the monoclonal antibody Bamlanivimab in early November. For Synairgen to do that equals a share price of £51.7."
I think your maths are it abit off here!
I'm pretty sure his numbers are correct, 57% rise since October, to a market cap of $196,000,000,000 from $125,000,000,000
Yes but for Synairgen to do that it doesn't equal a share price of £51.7!