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June 6, 2017. Buy Out at 63?

Take a spin on our BO pricing model!

The Trading Cyclist
Our model is generating a range of $35-63 BO PPS, per the low/high case scenarios below - where only the Voc price is different (25k vs 50k). My hunch is that this is both conservative and in the ballpark. 

It's conservative b/c: 1) patient population is consistent with Aurinia's projection; 2) assumes only 35% of population on treatment; 3) assumes 75% discount for European market; 4) pricing is at 50% of range projected by Aurinia; 5) uses target P/S ratio of 3, which is below Biotech industry average of 5.0. 

  • Outcome 
  • Patient Pool (Same for both Scenarios) 
  • Pricing
  • Price/Sales ratio 
Here's the Link to the model

  • Low end BO PPS w/30% discount: $35 ($50 no discount) 
  • High End BO PPS w/30% discount $63 ($90 no discount) 

Prev: 26.5 per 100,000 (Based on epidemiological study) 
Total Patient pool (US, Europe, Japan): 252,333 
% of patients on treatment: 50% 
Total Patients on treatment: 88,317 

Low: $25,000 (50% of Aurinia low end) 
High: $50,000 (100% of Aurinia low end) 
Discount in European Market: 25% of US Price 

Price/Sales ratio: 3.0 in both scenarios: 
Note: P/S average in Biotech is around 5.5

Comments

  1. Hard to argue with your model. The other intangibles include value added for Dry eye which could add substantially to the buyout figures obviously depending on what the company intends to do about that indication. My guess is a partnership for dry eye will be forthcoming once proof of concept is verified via the canine model. Perhaps the company that partners the dry eye indication would just simplify matters by buying the whole company. Merck being the obvious choice. Should be very interesting to see how it all plays out. Your model seems excellent except for not taking into consideration (which they cannot at this point) the aforementioned additional revenue from dry eye and possibly some value for other indications. Good work.

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    Replies
    1. You're of course right about the potential value of dry eye indications not being included here, which makes the model quite conservative! I just haven't done the homework on the dry eye market (for dogs or people), and haven't a clue about pricing. When Aurinia reveals more about this, I'll update the model to reflect at least some of this value. Cheers TC.

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    2. That has always been my target since loading up on AUPH....$5Billion @ 63, not as greedy as $90/sh...

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  2. Hi everyone. I'd be completely happy with the "low end" BO of 35. That would be enough to justify a victory trip to Vancouver! Either way, this is a wait/holding game...but this time around I'm not going to waste any time jousting with BR (!). I took a peek over there today and he basically seems to be posting to himself - something like five out of the last eight posts. Anyway, good to have you here Greggors!!!! Let me know if you'd like to be a guest contributor (in case you want to write a longer piece that starts a new thread), and I'll get you set up.

    All the best,

    TC

    ReplyDelete
    Replies
    1. Thanks TC awesome model it looks like you really spent some time on it. I greatly appreciate it and your work here.

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    2. Thank you for the kind words TC. If I ever have the time to become a prolific pontificator, I will consider your offer :)

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  3. Thank you for all your hard work, this is great to see and have.

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    Replies
    1. Thank YOU John, and hope to see you here often on The Auphians!! Don't know if you know the back story, but this site was created as a refuge from iHub, which was taken over by trolls. Lots of great folks over there, and they are starting to migrate here. What you get are some really smart people writing serious stuff about the stock - Vid, Greggors, Lunacy, and Jess have already started to make the transition. It's also an uncensored forum (with the exception of a certain troll that destroyed the iHub board). And....no need to go long here. Also welcome any comments you might have...and perfectly ok to say things like.... " I THINK YOU'RE FULL OF...." We'll not censor you.

      So welcome.

      TC (aka John aka Trading Cyclist)

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    2. What's even more mind blowing is that I'm sure Glick will make them take into consideration when determining BO price the potential off-label use for transplant and other autoimmune diseases as well.

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    3. Excellent point, and the model doesn't even attempt to value any of that. So I'd wager it's pretty conservative!

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    4. Thank God I'm not the only one here with white hair. Nice photo John.

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    5. Maybe we should call him Blondie like Clint Eastwood in TGTBTU, lol.

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    6. Hahahahaha, Blondie indeed! I'm an old fart at 57, but was delighted to be back on the bike. It has been 12 weeks to the day since the knee replacement, and I managed a 10 mile ride today without any drama...although was definitely slower going up hills. For those of you who can tolerate my overaharing, you lose about 60% of your quad strength bc of the procedure, or to be more specific because of the tourniquet that strangles the muscle while they are sawing on your bones with tools from home depot. Apparently they cut that muscle a bit as well, which also doesn't help with cycling skills...

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  4. Great to see your site doing so well TC. It would be poetic justice to see the miscreant BS/BR talking to himself on Liehub while every other credible poster is here.

    ReplyDelete
    Replies
    1. Thanks for the encouragement and all the posts. Let's make this work!!

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    2. The best thing going for AUPH besides being way ahead on all categories is the fact that they have COH for the duration of the entire P3 trial. If Glick doesn't like the offer that comes along, he could just wait for the next one and without any risk since P3 is
      totally blinded until after completion.
      My only question to anyone of you here is if the prospective buyer asks for the data for the already dosed patients, would Glick be obliged to show it?

      JessPro




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    3. It's a double-blind study, so even Glickman and the team won't have access to that information. While the PO sure killed the stock's momentum, it is very valuable to have the COH and call your own shots.

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    4. Good question. My understanding was that no data would be revealed until after all the patients 52 week data was collated which will take over 2 years from now I think. I could be wrong.

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    5. It will be a risky proposition for the prospective buyer(s). While P2 trials passed with flying colors, would the pb rely only on the P2 data and risk their billions to acquire the company? I don't know the reasoning behind the blind trials unless he wants to go it alone or to really maximize the BO price. What say you guys?

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    6. The randomized double-blind trial speaks to the legitimacy of the trial. Carries more weight within the medical community.

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    7. Correct a thousand times. Predictable, you're way ahead of me! :-)

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  5. Did anyone like my comment on ihub regarding BR's "expert" saying there is only a 60% chance that the drug would be approved? I really don't understand that guy.

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    Replies
    1. There's not much to understand about BR. He's just your basic internet asshole.

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    2. I think he's gotta be a paid troll. If you look at topics on LieHub, you can see that he's dominating the site. So that said, I'm not going to mention the bastard here again.

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With kind regards to all

Trading Cyclist (aka TC)