scholle schreef:
En een tweede opinie:
"1) Would sales ramp up quickly enough to avoid the need for another share issuance?"
Maybe, but that depends a great deal on the market's reaction (as reflected in share prices) to FDA approval. Without share price appreciation it will be unable to timely draw enough under the recently negotiated equity line of credit to finance its near term cash burn rate. And, ENCY managment has shown itself as everything except nimble afoot in responding to market opportunty in EU. It is either unable or unwilling to adapt its game plan to circumstances that differ from its original planning scenario.
"2) What expectations would there be for EU and US sales for 07 and 08?"
Tracleer sales in first nine months 2006 amounted to CHF651.9 million in 35 countries. The CHF651.9 million global sales converts to $539 million, or an annualized rate of $718 million. The drug is not yet available in all 10 "new" EU countries, but likely is available in all of the original EC 15. Since the global market includes a minimum of 10 non-EU countries and the U.S. accounts for 60% ($431 mil.) of the total ANNUL market according to some sources, the EU share of the 2006 Tracleer market might fall in the neighborhood of 37.5% or roughly $270 million. (Earlier this year ENCY estimated the 2006 EU Tracleer market at $300 million.)
EU approved Thelin Aug.10 and issued the EU label Oct. 13. Now, 4 1/2 months after approval, Thelin is available for sale only in UK. Introduction in Germany is planned before yearend. As Given and company don't seem able to muster even turtle speed in EU market development, I don't expect Thelin sales to reach more EU countries in 2007 than UK, Germany, France, Italy, Spain, Netherlands, and Belgium. A 40% market penetration there would imply sales of around $7.25 mil a month. Assuming first year sales build to that level by yearend and average 20% for the year overall, EU Thelin sales would generate $43.5 million in 2007. 25% of the U.S. market would imply revenues of $108 million. U.S. and UK sales together might total $151.5 million.
"3) How would those sales translate into profits (if any) for ENCY?"
ENCY has recently burned cash at the rate of about $25 million per quarter. Projecting a 5% increase in the burn rate for inflation and added marketing expenses, $151 million of Thelin revenues would cover those costs with $46 million to spare. Argobatran revenues would lift profits above $52 million.
"4) What would be the reasonable range on share price expectations?"
Assuming 10% equity dilution through the equity credit line agreed in Sept., the scenario outlined in 3) above would yield ** 2007 ** earnings of $0.80 share. Applying a price earnings multiple of 45 yields a share price of $35.90. Earnings would increase ** 2.3 ** fold in 2008 to $1.84 share if ENCY boosted US market penetration to 40%, averaged 40% penetration in the EU7, extended EU sales to enough other EU countries to cover any cost increases. The same P/E multiple of 45 would imply a $82 share price while a P/E multiple of 60 would imply $110 share.
On the other hand, another FDA "approvable" letter or an FDA rejection would leave ENCY unable to draw enough financing from its equity credit line to maintain its current level of operations. It might be compelled to put a hold on further clinical development of its pipeline, dismiss its US sales force and put on a full court press to develop EU sales to survive. Or, it might be available for acquisition by another firm at a fire sale price.
"5) Is there any reason to hold onto ENCY after an approval? (Is there a reasonable growth expectation for Thelin to make the company worth holding....and is anyone aware of a second trick for this pony?)"
With a US approval, Thelin sales could grow for several years. Argobatran revenues are also growing. While there may be nothing nearing the end of the develoopment pipeline right now, ENCY is working on one or more compounds targeting asthma which might reach the market in a few years. ENCY may be worth holding long enough following an FDA approval to see whether or not it is able to compete with Tracleer in EU. On the other hand, selling on a price point following an FDA approval and reaquisition at a lower price point later may prove a good strategy.