Genmab — April 2017
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Average analyst model: low penetration in first line (20% - 50%) and 24 months Dara treatment, what if this gets updated to 60% - 75% first line penetration and 7,5 years of Dara treatment??! Conclusion: The current MM peak sales estimation is far from what it will be in 10 – 15 years from now. I believe the MM only sales will go to 15 – 20 billion.
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So what does this say, and how can you find out? There’s only one way and that is by making the calculations yourself.
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I did some calculations, based on the 15 and 20 billion peak sales scenario’s. And I put in a few very soft assumptions: 1) Total shares outstanding in 2030: 65 million (currently 61 million) 2) Net profit margin Genmab in 2030: 75% (With such high royalty income the margin in reality will be significant higher) 3) Average royalty: 18% 4) Currency USD/DKK: 7.00 DKK per 1 USD
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Based on these assumptions and a stock price of 2500 DKK the P/E will be: 15 billion USD peak sales = +/- 19 billion DKK royalty, 75% net profit = 14.2 billion DKK net profit = 11 P/E 15 billion USD peak sales = +/- 25 billion DKK royalty, 75% net profit = 18.9 billion DKK net profit = 8 P/E J&J at the moment has a P/E of 18 and Roche of 22, off course P/E’s at the moment are quite high however
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this would mean that with a stock price 4000 DKK and the assumptions above Genmab would still be under the P/E of J&J.
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LET THAT SINK IN: 4000 DKK would mean: 15 billion USD peak sales = 17 P/E 20 billion USD peak sales = 13 P/E
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Thus, when the penetration data and the duration of treatment per patient will reflect the reality, the peak sales will go up significantly, maybe even double from the current level. Therefore the stock price has room to move up to 4000 DKK based on MM alone.
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The real question is, do analyst have the courage to reflect the real data in their models? I believe this will happen, however will go very gradually: stock moves higher > analysts update their models. Of course this will not fully happen in the next 2 years, however when we keep getting good data (Pollux PFS updates, ORR in Alcyone study and faster than expected sales growth) the analysts will definitely have to update their models fast.
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Would love to hear what you guys think, maybe I missed something. However, I believe the direction I’m going is sound. The assumptions of the analyst are very very low and with the data we’ve already seen the peak sales is going to beg significantly higher. Next time I’ll write a blog post
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@GlobalMacro great read! -
Rolig nu - Vi har lige haft et fald på 15% fordi et forsøg blev droppet. Når vi har 40 forsøg kørende, er der vel ikke ret mange, der ikke kan se muligheden for, at det gentager sig. Selv om det er andre, der laver combiforsøg med Dara, vil det svie,hver gang det ikke lykkes. Kommer der flere tæt efter hinanden, ryger vi langt ned. Bare for lige at holde os ved jorden.
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Enig bikube.
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I would surely also be happy with 4000 in mm in 2030. But there are 12 month targets of 1700now so I'm thinking that Jeffries that have target now at 1700 probably will have higher targets that 4000 kr in 2030. 13 years down the line is highly speculation. For me it's more interesting to know the fair price of genmab in the next 1 to 2 years. A lot of things can happen in 13 years and it's in my view impossible to predict 13 years ahead.
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