Scancell Share Discussion Threads

[gazza] 26/3/2019 08:00

Or no company makes 100% net profit?

[gazza] 26/3/2019 07:59

Which one, meet you halfway?

[inanaco] 26/3/2019 01:29

Gazza

I don't even have to reply do I

that statement you have just made says it all

[gazza] 25/3/2019 22:30

Moljen,I agree. I had considered that the consumer/medical community sales and marketing would be out of Scancell costs. They still have to support the licencee(s) and presumably new research, new trials. As the company becomes cash generating they will award pay rises, recruit more directors, researchers, possibly some big names in the industry. Flashy offices to better reflect their new-found status, more conferences all over the world. Out of all the aforementioned, I hope the lions share will go to further research.

[gazza] 25/3/2019 22:07

"its ok giving a "clever reply" .. but in context its not"There's nothing clever about thinking ANY company can make 100% profit either?I say 20%, you say 100%, how about we meet in the middle - 60% ?

[bermudashorts] 25/3/2019 18:46

Inanaco,

If you go back to my posts over the weekend you'll see that I've been trying to establish at which stage Gazza was using for his calculations. My with you comment refers to that and his position re. licensing.

[inanaco] 25/3/2019 18:31

so give us a breakdown then of the expenses you have put against sales ...

amounting to $400m approx

its ok giving a "clever reply" .. but in context its not

[gazza] 25/3/2019 18:24

Inan, "if you add back in the missing 80% profit"No company in history has made 100% profit lol.

[moljen] 25/3/2019 18:23

Gazza - I never thought I'd ever say this but for once I'm seeing where Inn is coming from. A Net Profit figure of 20% would assume you're manufacturing, marketing, distributing etc etc but if you're a licensing business you'll have negligible costs for each as the licensee will bear the brunt of them (think music artist viz a viz record company - the record company bears theses costs the artist just get their cheque with very few costs they will then deduct).

[inanaco] 25/3/2019 18:02

bermuda

are you sure ?

maybe you can explain the last paragraph then with a breakdown


Tosh ... "established"

subject to patent ... !!

[bermudashorts] 25/3/2019 17:54

Gazza,

Right, am with you now.

[gazza] 25/3/2019 17:48

Bermuda,
Sorry, I didn't make that clear. I expect Scancell will allow pharmas to sell SCIB1 and pay them a royalty (or licence fee) of say 17.5%

A licensing "deal" will be an agreement between said pharma and Scancell whereby they agree to paying x% OR an upfront payment (advance royalties) and a reduce royalty on sales to claw back the advance.

There is a certain amount of money up for grabs, it makes little difference to the long term return whether it is up front or not. If it IS up front, then the cash requirements raised through issuing more shares will be reduced.

I don't use a DCF valuation either, either it works and will be valued on revenue/profit or it doesn't and it will be worth nothing. I'm trying to work out what my investment might be worth in 2024 if this is successful. I think my assumptions can be defended (may not prove 100% accurate) but they are reasonable.

So far I'm seeing 98p for Melanoma, 73p for NSCLC, 29p TNBC, 28p Ovarian and 10p head and neck. So given what I invested in 2012, quite happy if this comes off. It will still be better than making 5% per annum (compound)

[tosh123] 25/3/2019 17:45

PE ratio's of " established " profit making companies with many years of proven earnings, differ from those with no historical data.
An established company is treated totally differently a fledgling company.

[inanaco] 25/3/2019 17:00

On a PE of 10, that gives a market value of £760M or £1.96 per share (388M shares)


x 4 ......... = £8 a share

if you add back in the missing 80% profit

based on gazza prediction

however

Astrazeneca pe ratio

P/E Ratio, 36.97

Pfizer has a PE Ratio: 22.38 (PFE)

[inanaco] 25/3/2019 16:51

Gazza
as per post

Scancell receive a royalty of 17% = $493M

Scancell make a net profit overall of 20% = $98.7M = £76M

--------------------------------------------------------------

can you please explain this


when have scancell expenses run to $400m per annum ?

and if it did .. what would we be spending this amount on ?

[bermudashorts] 25/3/2019 16:26

Gazza,

On the one hand you say you're not factoring in a licensing deal but on the other you talk about when the products are on the market under license, so presumably you are making the assumption that they're licensed.

As for an accurate figure, there are just so many unknowns and variables and the products are at such an early stage. Both Panmure and Hardman analysts wouldn't use a traditional DCF valuation as they didn't feel it would be appropriate or meaningful. If you really want to go down that road though, why don't you just use the Trinity figures?

I'm happy to add comments re. your assumptions if you like but I'm not sure where you're going with this.

[gazza] 25/3/2019 15:46

I think it's a fair assumption that the first 4 or 5 products will have to be licenced, Scancell just don't have the funds to do it themselves.

I'm not factoring in a licence deal, a deal is simply an advance on future royalties. I'm trying to get an idea of what Scancell might be worth when the products are on the market (under license) around 2024/2025.

The calculation is simple, so take Melanoma as an example:

2024 market estimated at $14.1B.

A 20% market share gives $2.8B in sales revenue.

Scancell receive a royalty of 17% = $493M

Scancell make a net profit overall of 20% = $98.7M = £76M

On a PE of 10, that gives a market value of £760M or £1.96 per share (388M shares)

Allowing for 100% dilution (a lot of cash needed before 2024) = 98p /share.

As I said, the calculation is very straightforward what we can debate is the numbers and assumptions I have used:

Market $14B (2024)
Market share 20%
Royalties 17.5%
Net Profit 20%
PE Ratio 10 (could be higher if there were other products on the way)
Dilution factor 100% (I think it could well be much higher)

Exchange rate £1 = $1.30 (Brexit could affect this drastically)

Just trying to apply some science to the numbers rather than pluck a figure out the air. If you want to throw some of your own numbers in I'll recalculate the price.

[bermudashorts] 25/3/2019 14:59

Gazza,

Not sure I'm with you - all DCF valuations are based on projected sales and the fact that Trinity have factored royalties into their valuation suggests they're assuming the products will be licensed. We don't know what assumptions they're making for the timing of any licensing deal - in terms of revenue it's not that important, it's the percentage figure that counts no matter when the deal is struck. It could make a tremendous difference to costs of course.

[gazza] 25/3/2019 14:09

Thanks for the responses guys.

Bermuda,

There would be no sales if it was in clinical trials. The Trinity figures are based on sales of approved product with a launch date of 2024 (Melanoma) and 2025 (NSCLC). The royalty on NSCLC is 15% allowing for the CRUK cut.

[bermudashorts] 25/3/2019 14:02

inanaco,

what do you mean?

[inanaco] 25/3/2019 13:43

Bermuda ..

have you just posted .. "variable" ? for those looking to translate that LOL

[bermudashorts] 25/3/2019 13:22

goooosed

Thanks for that

[bermudashorts] 25/3/2019 13:21

Gazza,

That would be a fairly typical rate for a phase IIb or III product. For preclinical you'd be looking at low single digit percentages and for phase I/II - single digit to low double digit. Royalty rates often remain confidential so worth remembering that it's hard to get accurate figures for averages and of course they vary tremendously. Often also tiered with different percentages for different levels of sales.

All IMO of course

[inanaco] 25/3/2019 12:50

depends if the deal is front or end loaded ..

basically the "overall value" is the start point so it depends on mainly Efficacy in that the Risk element is high or low .. if its low then a end loaded deal is far more preferential as you retain the possibility of efficacy value being included.

this is why i think Moditope is so difficult because "Complete Response" efficacy could add billions to its value .. again if you look at the NICE formulae these elements really do make a difference to the amount you can charge