Recs

3
Player Avatar PDTBiotech (92.25) Submitted: 7/7/2011 2:10:40 PM : Underperform Start Price: $20.57 SGEN Score: -62.09

$2.34B for a drug which treats HL and ALCL seems very, very rich, even when taking SGEN's strong balance sheet into account. Very cool platform, but the target for brentuximab vedotin is expressed on a narrow enough set of tumor types to keep this drug as a commercially modest proof of concept for the platform. Hats off to SGEN, which has maximized value for this asset, they've done a great job of hyping its potential and swindled Takeda out of a $60M upfront payment for ex-US rights. Hard to see this drug breaking $250M peak in the US even with very aggressive pricing, which makes the $2.34B market cap look very shaky.

Member Avatar PDTBiotech (92.25) Submitted: 8/20/2011 4:55:19 PM
Recs: 5

Adcetris was approved yesterday. Now things will get interesting, as it becomes much easier to calculate realistic revenues from that drug, and then build a much cleaner valuation of the company than you could previously. A lot of stocks have gone down recently following approval (HGSI, OPTR), so it'll be interesting to see what happens with SGEN. If you assume $20k-ish/month the current valuation is still far too high, even assuming strong penetration into the target population. Trials are ongoing for earlier stage use, but in a tumor type with 80%+ cure rates it's going to be a lot harder to make the case for use there than in relapsed/refractory patients. I'm maintaining my thumbs down, despite enthusiasm over the approval.

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