Monday, June 13, 2016

NVAX fair price now and in the future.

Trying to come up with another realistic back of napkin price for Novavax based just upon RSV vaccine market.

Pregnant mother:  In the US there are about 4M live births/yr.  At $100 per dose, the potential yearly market US is 400M.  For sake of figuring, I’m gonna guess in the US that 75% get the vaccine so 300M sales each year.  In the world there are 131M births per year.  I’m gonna guess low that 25% get the vaccine and that it averages $25 each, so sales would be 818M, perhaps ½ goes to NVAX if they partner.  So total guess for maternal immunization using conservative guesswork 709M per year in sales.

Elderly:  46.2M population in US @ $100 per vaccine is 4.62B per year in sales.  World market adds over 600M more in population, figure 25% could take it (?) and price $25, sales would be 3.375B per year.

So potential sales could be 8.7B per year, at some point in the future, my guess is 5-10 years down the road.

Now, taking an old school run of the mill pharma like Pfizer, sales of 50.99 B, market cap of 214B, price to sales ratio is 4.2.  Reverse engineer a market cap for novavax gives 8.7B x 4.2 =36.54B market cap, this would yield a price 20.4 times the recent price of 6.5, or about $132 per share.  I really have no way of figuring a risk premium or time value of holding this for 5-10 years.  What I did figure in the past was to subtract 20% of the value each year.  If NVAX can execute the above sales figures in the next 5 years, I figure the present discounted value to be $43, if over the next 10 years, the discounted value would be $14.

Now let’s take a price to earnings approach comparing to Pfizers 28.93 p/e.  I assume the sales would be highly profitable, perhaps 50% profit, 4.35B/yr.  With roughly 280M shares of NVAX, this equates to EPS of $15.53.  Multiply this by the p/e of PFE to get a price of $294.  Discounted back over 5 years gets current price of $96, over 10 years gets current price of $31.

All bets are off if P3 sucks.

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