holenbeer schreef op 28 april 2021 08:30:
Post van BioBoyScout op Yahoo:
Valuation dilemma. I believe that Arrowhead is coming to a cross-roads where valuing the company "fairly" will become very difficult. If Arrowhead can show that it can successfully target diseases extrahepatically in multiple tissues, the world is truly their oyster - more so than even I can fully imagine, or even begin to understand what the "fair" method of valuation really is.
While biotechs generally get valued by the drugs that are in their pipeline based on the diseases they're able to treat, and what kind of sales they can generate from that particular patient population. Those sales are then risk-adjusted and then also further adjusted to determine their present value. This is a fairly simple, straight-forward process to come up with a fair valuation. However, the tables are turned on this process when you have a tweakable technology that has literally of hundreds, if not thousands, of applications in areas that no other drugs can come close to in effectiveness, particularly when you can go outside of the liver to other tissues. An RNAi knockdown chart is just not in the same ballpark as a knockdown chart using other modalities. This is clearly a game changer, and as I said earlier, the world becomes your oyster.
So how do you value such a biotech? Do you just continue to value the drug pipeline as you normally do? That's one approach, however, everyone now knows that there are PLENTY of new targets coming, and it's just a matter of time. Why? because the drug development process for an RNAi drug is a fairly straight-forward process, and that process is the TRiM platform - just insert a genetically validated target, run your bioinformatics to determine your targets, test your targets, apply your appropriate targeting ligand, and poof, you have a super effective drug that will just blow away any other modalities out there.
So what does this mean? It means that even though you may not have a pipeline of 100 RNAi drugs today, you have the very solid potential of developing a pipeline in the near future that has a very high chance of being able to produce, and I hate to say it, well over a trillion dollars in sales. That is exactly why, if extrahepatic truly works, Arrowhead scientists should be multi-millionaires.
So that begs the question, HOW DO YOU VALUE SUCH A COMPANY that has a flexible platform to hit all sorts of other targets? It HAS to have a valuation beyond the existing portfolio, as you know that it's the goose that's laying golden eggs. It's easy to throw any number out there for many reasons, i.e. $1B, $5B, $20B, $30B, or even $50B or $100B, as you know that this platform will end up delivering and provide a fantastic ROI. The drug candidates are there, the need for more effective drugs in other tissues is there, and the money to pay for these drugs is also there.
So that's the valuation dilemma. How do you fairly value the TRiM platform once extrahepatic proves out? I have plenty of ideas, and it will be interesting to see how analysts move forward. I do think it would help if the company laid out a 15-30 year plan of what is truly possible, as that would help investors understand the amount of potential future revenue that's at hand. That would also help value TRiM. Chris wasn't kidding when he was using the word franchise to describe all the various different tissues and targets they can go after. I think he knows he's sitting on a gold mine, and he just needs some time to see it through.