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For this part of the valuation I’m going to concentrate on Lupus and RA. I regard these as the core indications for 1801 although if they work then other equally big indications (Sepsis) could quite easily come into play. However, by the time we’ve finished with Lupus/RA I doubt very much that we’ll be in control of the drugs. If we get 1801 into the fast track for Covid then the whole issue of toxicity goes away and the risk factor improves significantly. Previously I had modelled 1801 with a 95% discount. Getting it into Agile will IMO reduce this to 85%. Based on the cost of the cheapest drugs to treat Lupus (Prednisone) I would place a risk adjusted value for 1801 now (Post Agile but pre CTA) at 10p. On CTA it rises to 30p and on commercialisation the full value would be £2.02. For RA where the cost of treatment can be much higher these figures would quadruple as a minimum.
I’m going to value SAR in 5 components: Tyk2 Covid, TYK2 Immune, TYK2 Cancer, SRA737, Aurora & SKIL (the last two I’ll combine because I have little to work on). So, first of all to Covid. We know that pre-clinical POC is ‘encouraging’ and will almost certainly go to the clinic. How it gets there is another thing. I’m basing my model on Dexamethasone because the pricing of that drug is at the bottom end of the scale (£11.45 in the UK) as opposed to Remdesivir (£1,590 per course). When I ran the model with Rem it couldn’t cope with all the zeros. It would even have made Thoth’s eyes water! I’ve based my model on 10% of the UK adult population needing 1 course each year. This seems reasonable as the NHS will need to take a precautionary approach to prescription – better to prescribe and it not be needed than not to and have a hospital case (and a legal case to follow if a death occurs). I have then used a PE of 10 which is an underestimate because the patent on 1801 is much longer. I have then assumed that if it works in the UK we will see it rolled out in the US and EU. I have allowed nothing for Africa, India and South America as we may need to be philanthropic. I have also allowed nothing for China and Russia because they will simply copy it. On this basis I have then discounted the value by 85% as this is still a high risk drug (in terms of success). However, my model shows that even at this discounted rate it commands a SP of 25.9p. If it goes the whole way then we have a drug worth a SP of £1.72 at today’s prices and the current number of shares in circulation. Pricing the drug at £11.54 with a margin of 80% is most likely a significant undervaluation. Even the cost of drugs to treat Shingles is more than twice that. I therefore see these figures as minimums.
SOG - the figures don't add up anywhere. Not one country measures cases accurately or honestly. Completely agree that complacency will be the biggest problem in countries where the vaccine has been rolled out to the masses.
No problem. Our hotel is still open so clearly not where your friends stayed plus we'll be spending most of our time walking the coastal path and if we spot anyone coughing or sweating profusely we'll set the dog on them while we watch from a safe distance!
Skye - You've just made my wife very worried. We were due to fly to Jersey tomorrow for a long weekend. Had to cancel because the States of Jersey have made the UK Red Status and we can't risk testing positive when we land (we also couldn't find a private PCR test that meets Level 3 UKAS accreditation which is what Jersey now demands in addition to double jabbing). Trip cancelled and refund arranged. However, we found and booked a last minute hotel available in Cornwall......
George – Don’t forget the boutique bike builders! While waiting for the inevitable news I’ve been ogling a Reap Vulcan…..
On a more current topic I’ve been giving some thought to the knock on effect of Covid. The Evening Standard last week revealed that there are currently significantly more deaths at the moment from the flu than Covid. This news flew under the radar but has huge ramifications for the NHS. As we head into winter we could be presented with a perfect storm of a vaccination booster ****tail (multiple versions to tackle C-19 variants, different strains of the flu as well as the common cold, pneumonia etc) along with rising apathy towards distancing, masks and hand hygiene. Couple this with a summer of mass participation events (Football, Wimbledon, Goodwood Festival of Speed, Music Festivals and staycations) all of which gather people together and then send them back to their homes across the country. Will people accept having their arms used as pin cushions for one booster after another? Will the ****tail throw up mass side effects? All in all the vaccine is only part of the solution and will wane as more and more people (like Andrew Marr) get double jabbed and still catch the virus. We may be late to the party but I can’t help but feel that when we do deliver the goods its going to be a long term solution, a drug that really does make living with a constantly mutating set of C-19, Flu, Viral Pneumonia viruses a workable future. Then there’s RA, Lupus and Cancer. GLA
Hi Potnak - I said a few weeks ago that there was no logic in putting 1801 into CTA until after the Covid PoC results were out. If the data is good then its fast track for 1801 in both Covid and whatever indication they choose for immune. Furthermore a successful PoC is probably the best advert SAR can get in order to secure a licence. We simply have to wait just a little longer. GLA
Hi Ahfam - I spotted this over my breakfast porridge. It's a desperate attempt to get something out other than a vaccine. Just because a drug is already in circulation doesn't mean its a winner and I particularly disliked the 3rd reason for trialling it - 'It's relatively safe'. Yep, so is petrol providing you don't put a match to it.
A short explanation as to why Keytruda's success in Cervical Cancer is the big news today. Currently Keytruda generates sales of around $13bn pa. Its focus before today was SCLC but other cancers are within its scope. Analysts estimated that Keytruda (before cervical) would have a value to Merck of $200bn by 2025. That's because of its PE which is currently set at 20. Any drug that could work alongside Keytruda or similar drugs has the opportunity for mega sales simply because any drug that enhances performance at lower doses is a very attractive option for a profession governed by safety profiles. Lets speculate and say that 737 worked well with Keytruda. At worst we would have a drug comnbination that generates combined value of $200bn. It would not be unreasonable to argue that 737 could be worth half and Keytruda the other half. With a value of $100 bn divided by the PE of 20 gives us sales of $5bn pa of which SAR would get 27% ($1.35bn). In real money that's £1.08bn or roughly 33p per share per year. Unlike TYK2 737 is much closer to commercialisation so 33p does not need to be highly discounted. At worst the discount would be 50% giving us 16.5p. At todays price that's 16.5p on top of the current 6p. 24.5p overnite in effect. That's just for 737. 1801 and 1802 are on top of that and that's why I think Merck's news is big news and good for us. It's also why I'm not going for a full valuation before we know about the Covid PoC and how that affects 1801 and 1802 against big markets like lupus, RA and other cancers. Food for thought while we wait..... GLA
Another big win for Keytruda. Just imagine a combo with Keytruda, Gemcitibane and a certain SRA737.
https://endpts.com/mercks-keytruda-blazes-a-path-in-first-line-cervical-cancer-making-good-on-its-push-to-get-after-earlier-patients/
Over to you Mr Dilly!