Best post of the week goes to..............30 Oct 2022 17:45
The best post of the weekend. I will be getting some money soon to invest again. GL all here.
I've been around the block in biotech for a number of years, like many others, some of whom invest in VAL, so I can estimate values of SPVs to levels that I think are reasonable; not too rampy, but conversely not too conservative, either.My personal experiences of the market would give a value to any niche, novel, first-in-class compound entering a SPV of around the 10M mark. This is reasonable. The first 6 months in an SPV will build the clinical rationale of the compound with efficacy testing, extending to the year 1 mark, so, at that stage, we'd be looking at around 25M in value. Concomitant to this would be shorter-term safety testing. In year two, we'd have more complex safety testing to calculate Phase 1 doses, and being oncology for the ones under evaluation, that should be fairly swift. During the second year, if those criteria are met, then we'd have a value of around 50M, per compound. At commercialisation, assuming VAL want to take it all the way to being clinic-ready, the valuation could be anywhere between 50 and 150M, assuming a clinical milestone package of 3-500M, and an assumed 7% ultimate royalty. It goes without saying that a deal for 201 will give confidence to this strategy, and allow a swifter realisation and re-rate of the SP to reflect this.If VAL ultimately have 3-5 SPVs, assuming a further dilution, over 2-3 years, of 40M new shares (obviously this might not happen), then the MCap would conceivably be 250M (assuming majority ownership), so I like the strategy and the odds, regarding the SP here, at 140M shares. The chances of an SPV being "bought" early, say within a year of launch, out of 3-5 opportunities, I would say are quite high, as a bigger pharma is likely going to be tempted by a given platform at some stage. I would therefore expect a "deal" anytime in the short to medium term.Either way, at a MCap of 15M, I, for one, despite being as displeased as many others with TX, would urge SHs to look at the wider strategy. It isn't going to take long for the BOD to provide material updates around the SPVs in the next few months, by which time, the MCap should be re-rating anyway. I have already pressed Suzy for the need to do this.In any case, I'm finding it of limited value to constantly beat the BOD over the head regarding 201, having been privy to several conversations recently. They know how we feel, but they are not going to bend. It's frustrating, but it isn't going to change. So my efforts will be focused on trying to influence a proactive engagement with the new SPVs. If folk can't get past 201, that's fair enough. It wasn't an ideal scenario, and it isn't an ideal situation, but it is the result of a slightly dog-eared inherited "project". To my mind, it's going to be better to press on the projects that are fully under the control of the BOD, and that is the SPVs. I will always hold feet to the fire for the SHs
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