RE: What do we think the deal value will be ?10 Jan 2026 10:22
Morning Rookie, hope you’ve had a fine start to the weekend. I’ll be honest, I haven’t studied every individual deal that has ben done. What I can tell you is that valuing the market potential is something that a pharma can do in a matter of days, very very simple and will have been done as far back as September. Therein lies my concern as the missing component is whether the product has the potential. Tim couldn’t have been any clearer how ‘the magic’ would tie all of that together but I am suspecting that it is not very magic given we are now over 120 days of assessing this. My opinion is that the drug is not nearly as ready as implied and that is the conundrum, how to value it at this early stage.
On to the commercials, I can only look to Tim’s numerous comments (I know that could be futile considering the other inaccuracies). So when we talk about $1bn deals, we must be clear that these are over the life of the agreement (in the event of a licensing deal). Tim alluded to up front payments of $50-100m. So let’s max that out at £75m. If that was the final deal then the market would value IMM below cash in bank clearly. Now we have to add the add ons…
1. Milestones. These could be tens of millions over the course of say 3 years? What would the trigger points be ? P3 completion, P3 success, Patent approval, market launch, sales targets ? I would expect the first milestone payment to be 24 months down the line ?
2. Royalties. These would be the Lion’s share of the value of the deal clearly. Now when will this drug go to market? I expect c2030 but maybe sooner. So you have a long time until the bulk of the value kicks in. During this period they will need to conserve cash unless they have other very good potential drugs to invest in.
So, if a deal is done, I see maximum of $75m up front followed by possibly same again in milestones. Depending on the timelines for milestones, the market will place some value on those. The Royalties I cannot see being factored in at this stage as they are contingent on successful P3 and commerciality after many years. Hence I think £100m is a reasonable best case scenario.
More than happy to hear your counter views, with your own objectivity and not copy pasting high level deals from google.
To close, I have always said a buyout would be best to realise as much value as possible in one shot, but Tim seemed to diss this. Second to that would be an up front weighted deal. That looks unlikely due to the delays in anyone being able to assess the viability.
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