Potential Valuation29 Mar 2020 12:04
Focusing on the last sentence in the excellent article from the Times this morning;
“Synairgen could be on to a key treatment. Clinical trials are notoriously high-risk, but existing data shows its drug is well tolerated. Synairgen should have a part to play in the fightback against the pandemic. Buy.”
Let’s assume that the trial is successful.
Let’s assume that Synairgen are onto a key treatment
Let’s assume they do have a part to play in the fightback against Covid-19
What potential valuation could that lead to?
Fincapp’s recent research note has the following extract;
“Recent data from WHO suggests that c.20% of COVID-19 patients become seriously ill following infection. Assuming that 30-40% of the population is infected with the COVID-19 virus, that implies c.20m infections of which c.4m are expected to become seriously ill. For argument’s sake, let’s suggest that 5% of these patients require antiviral therapy; this would imply a market opportunity of $1bn, assuming that a 10-day course of interferon beta therapy costs c.$5,000.”
This is a $1b market opportunity for the UK only... how many other countries would want the drug? Scaling demand up to Europe + America would result in a potential market of 400m people assuming 40% got the virus. This results in 80m serious infections, and if 5% have antiviral therapy, 4m courses of SNG-001 @ $5000 per course. That would result in sales of $20b...
Giving this scenario even a 5% chance of happening gives a valuation of $1b, and a share price around £5.50.
This will start to be priced in as soon as we hear any positive news - it truly is extraordinary to think you could be a shareholder in a company that could potentially stop the pandemic whilst at the same time make a life changing amount of money. Fingers crossed it works!
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