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LegendInMySpareT...
Posted on: Jun 26 2020, 03:04 AM


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Posts: 15

I don't think it had anything to do with CUV in particular. It was a general market decline, which started in the US yesterday and then spread to Asia as some states in the US is seeing a spike in the COVID-19 infection rates again and have to halt or reverse the reopening of the states. All the stock markets reacted strongly and negatively first in the US, then APAC, and last Europe in the morning, although it seemed to have eased in the afternoon trading.
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LegendInMySpareT...
Posted on: Feb 25 2020, 01:42 AM


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Posts: 15

I can't see that there's an actual approval in the statement, just the comment that it won't be necessary to do a "medico-economic" assessment due to it being below 20M EUR. Is it equal to an approval when there's no need to do this assessment or are there other hoops to jump through before it's approved?
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LegendInMySpareT...
Posted on: Jan 24 2020, 12:54 AM


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Posts: 15

Have you seen this graph on shortman? https://www.shortman.com.au/market It suggest that the total amount of the top100 shorted was lower than it was at the same time last year (27B now against 32B same time last year). If those numbers can be trusted, the conclusion must be that the overall shorting is down compared to last year, of course with the caveat that if the total index is worth less than it was at the same time last year, this might not be representative as a percentage against the total asx100 market cap.

ASX100 compared to same time last year is up 22% compared to same time last year (not too familiar with how the asx is calculated, so pardon me if I am reading this wrong). https://us.spindices.com/indices/equity/sp-asx-100

So in short, if both the shortman data and the Asx100 data can be trusted it should mean that the overall shorting is well lower than last year, which I guess would deflate the hypothesis that the shorting against CUV is part of a general market shorting.
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LegendInMySpareT...
Posted on: Jan 23 2020, 08:04 PM


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Posts: 15

The person shorting the share will have to pay the dividend to the person he borrowed it from.

https://www.investopedia.com/ask/answers/04...ed-dividend.asp
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LegendInMySpareT...
Posted on: Jan 22 2020, 06:56 PM


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Posts: 15

Reading through the update it only say that AMAG (and therefore future assignee) has "a contractual obligation to use commercially reasonable efforts to commercialise Vyleesi".

Personally, I work with licensing agreements on a daily basis, although in a very different industry, and I can say that one of my biggest regrets put into an agreement is the wording "commercially reasonable efforts".

Unless they have linked that wording against hard numbers it's hard to interpret what makes up a commercially reasonable effort, it's really vague language in a contract. If they wanted to claw back the license they would likely need to go through some extensive and expensive litigation if they wanted to claim that AMAG was in breach due to lack of commercially reasonable efforts.

It's good that they still have 92M USD in cash on 31DEC, although that's a 4.8M cash burn since Sep30 where they had 96.8M. From previous communications they said they would have enough money for their operations through at least 2021, so I guess if they only burn 19.2M annually (assuming they don't ramp up expenses further) they will have cash for a couple more years, but from previous communications it sounds like they are planning to spend more cash short term.

On the paper Palatin looks massively undervalued, with 92M in cash, no debt, a market cap of only 162M, an FDA approved drug and several other drugs in the pipeline. With all that in mind it's hard to see why the company is only valued at 70M USD ex cash. The main reason why I am still holding back on investing in them is the lingering worry that something is not right under the surface. Their previous history of dilution, the management and their ability to take commercially sound decisions are some of my worries.
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LegendInMySpareT...
Posted on: Jan 17 2020, 09:49 PM


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Posts: 15

Hey PAD, what's your take on recent developments with PTN/AMAG? PTN still worth a shot in your opinion?
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LegendInMySpareT...
Posted on: Jan 10 2020, 03:20 AM


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Posts: 15

The AMAG decision to divest seems to me as a glass half full/half empty kind of discussion seen from the perspective of PTN. On one hand you could see it as positive that they will hand off Vyleesi to someone else, because AMAG is a sucky distributor, and hopefully someone else will do a better job than AMAG. On the other hand I would be worried that it's the drug that is a dud, because why would they divest something they just paid 160M USD for, if it was going to be a star product. Also there seem to be a lot of opportunity lost in having sold the drug to the wrong distributor and without any control of who winds up buying it, it seems PTN will get even less than the slim margins they were already looking at from AMAG in the time period it takes to hand it off to a new distributor.

For PTN I lean towards the glass half empty on this one.

PunkAssDerm, would love to hear your opinion on this recent news, knowing you have invested in PTN?

Personally I have tracked them for a while and held a small position in them, but decided to concentrate my investments into CUV prior to the FDA approval as PTN seemed far away from releasing any value from the sales of Vyleesi.
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LegendInMySpareT...
Posted on: Dec 4 2019, 08:56 PM


Group: Member
Posts: 15

Yes, it's something that is worth taking into consideration, but in moderation. What I was lacking in the dialogue on 7117 is what risk adjustment to apply, LH seemed to apply a certain measure of hysteria instead of a, well lets say levelheaded, approach of the risk of competition. (I guess in all industrys competition is a normal threat, so it's a bit fantastic even having to be in a situation where the discussion is whether there will be competition or not, as a starting point).

I had a further look at Sphene Capitals Monte Carlo Simuation valuation analysis from the 10th of October, specifically on what they had added as competitive risk factors.

Interestingly in their Beta (Finance measure of Risk, anybody unfamiliar can check up on Beta here, https://www.investopedia.com/terms/b/beta.asp ) they have assigned a beta of 1.4 to CUV

TABLE 1: DERIVATION OF FUNDAMENTAL BETA, 2018/19E-2020/21E
Degree of diversification 0.10
Competitive intensity 0.00
Business model maturity 0.00
Regulatory risks 0.10
Financial risks 0.10
Earnings forecast risks 0.10
Liquidity premium for pre-IPO valuation 0.00
Market beta 1.00
Fundamental beta 1.40
SOURCE: SPHENE CAPITAL FORECAST


On the different risks they have rated competitive intensity as 0 (as there the 10th of October was no competition, and there still isn't today), and diversification, regulatory risks, financials risks and earnings forecast risks all assigned 0.1 as a risk factor.

I am curious what additional risk to add with 7117, it seems that it would be inappropriate to apply more than 0.1 to Competitive intensive, as compared to regulatory risks (which we know is a real barrier to CUV, yesterday, today and tomorrow) it is not a risk that has actually materialised yet, and may never materialise. If 7117 was approved, a 0.1 could probably be assigned giving a Beta of 1.5. At this point I think at most an additional Beta would be 0.05 to assign to competition.

The beta is used in calculating the present value of the future cash flows (the higher the risk, the lower the present value).


I don't have the data sets that Sphene Capital has been using to make the simulation, so looking forward to when they are releasing the next forecast, but what I can say with certainty is that the valuation range they provided suggesting present value outcomes between 33 AUD - 116 AUD (and 80% of the outcomes falling within the valuation range of 46.90-73.3 AUD), is not going to be moved much by adding the 0.05 or 0.01 to the Beta of CUV. Even in their worst case scenario the present value is well above the share price of today and a Beta of 1.5 is unlikely to break that math.

I am posting this to highlight that yes, competition is a threat that should always be factored into the risk assessment of any investment, but its just one variable and not a start/end all input. The risk of 7117 being approved in the future should be measured for what it is, a potential risk that there will be competition. The fact that there is no competition today is a great place to be for any company.
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LegendInMySpareT...
Posted on: Dec 4 2019, 02:15 AM


Group: Member
Posts: 15

LH you posted this on the Oct. 9th before the impending doom and gloom of impending competition arose. En lieu of you providing the S and O of the SWOT, I guess the below post you made would still summarize the strengths and opportunities of CUV also when factoring in competition.

On a related note I am wondering if Sphene Capital factored in the likeliness of competition in their Monte Carlo simulation (MinusSinus, if you're reading this I would love your input)? I would assume they did, in which case the value of the company (even with the risk factor of competition calculated into it) is in a pleasant range where their Monte Carlo simulation calculated bear and bull case scenario equity values of AUD 33.10 and AUD 113.60 per share (and they put a price target of 58.4 AUD per share). Even better the Monte Carlo simulation suggested that 80% of the calculated outcomes would provide a valuation of between 46.90 AUD and 73.30 AUD.

Levelheaded Oct.9.2019:
Weeks Summary and Analysis

I have compiled a summary and observations of the last week because so much has happened it is hard to keep track of it all. After reading this I think everyone can agree we are just at the beginning. This company still has the potential to 10x from here.

Phase IV trial indicates benefit is 6 hours versus 0.75 hours. Huge quality of benefit and much more justification for drug price
In light of Phase IV trial the UK and other european countries will likely catipulate. Expect European revenues to double. Clinuvel offered to UK soon.
Drug was approved unanimously by the FDA committee indicates strong support for the molecule going forward. Value is recognized unequivocally
Drug is approved for 6 doses annually. This is generally more than in Europe. Europe will likely move to this too which means additional revenue expansion in Europe (50% more per patient in some cases)
Given the phase IV trial there should be no problem with US insurance acceptance and reimbursement of the drug
Company has foot in the door for EU / US markets. Additional indications are much easier to get approved than an original molecule. Expect add-on indications to go much more rapidly.
CEO compensation package details companies priorities: A) clinical trials for new indications B) launch of OTC products C) new molecules (likely skin penetrating) moved to human stage D) commercial licenses for products in other regions
Based on implied strategy revealed in CEO compensation we can conclude that A) Clinuvel plans to be a global dermatology company both in rx and OTC markets and likely eventually blurring the lines between the two B) they attempt to utilize partnerships / licenses to more rapidly develop their intellectual property.
Vitiligo program will restart in the US. US seems like a more friendly regulatory market than EU going forward (personal observation). Type-C meeting requested with FDA to explore the ethics and clearance of said program.
Company commits to keeping costs under control. Indicates it won't dilute like some biopharma companies. Indicates loyalty to shareholders IMO. Also indicates why partnerships / licenses will be a strategy to leverage to utilize other companies area of expertise more effectively
Topical ready for clinic in 1 year.
Company plans to move quick without educating competitors so it gains first to market.

From a "fundamental analysis" viewpoint. Clinuvel is trading at a PE of 122. For a biotech this is actually very good. Many of them trade higher and many trade at infinite PEs (continual losses). Hell, Netflix trades at 106 and it has far less growth potential than Clinuvel, IMO.

However, looking at Clinuvel's PE. That only includes revenue from a partial European rollout. Consider that in the EU most people are only getting 4 doses. When it moves to 6 that is a 50% increase in patient revenue right there. In addition, very few EPP patients are being treated. Look at the UK which has been denying the rollout. All of these things will disappear now with the new trial showing efficacy, IMO.

I expect EU revenue to double just from new patients. And, I expect revenue per patient to go up 25%. These changes alone would put the PE just from EU at 50x. Now, consider the US which is an on-average much wealthier market. It's revenue potential will be at least what the EU is. So, if nothing else changed and market cap stayed the same as today and income grew just due to EPP I expect in 2 years that the PE ratio would be 25x. That is not including any other indication.

Now, add in the fact this is a growth company, it will have new indications in the pipeline, and no early stage biotech trades at a small 25x and you will conclude that the market cap / share price will continue to increase over the next 2 years due to both 1) increased revenues from both markets + japan / Australia eventually 2) increase indications which will increase future expected revenue and thus cause PE expansion.

It is my viewpoint that the company can easily double in value from this price within one year.
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LegendInMySpareT...
Posted on: Dec 4 2019, 01:52 AM


Group: Member
Posts: 15

Ceteris paribus, if a company with no approved drugs can be acquired for 3B USD, then why wouldn't it be plausible for a company with a FDA approved drug and a pipeline of other drugs in same stages as a company with no drugs further than phase 2, to be as good of an acquisition target or better (even with the chance of a potential competitor in the future). It seems to me there is comparably more uncertainty about a company that doesn't have any of their drugs out of phase 2 yet and is losing 129M USD per year; that company will face the risk of both competitors and not getting their drugs approved. So I don't follow your logical deduction on how there is too much uncertainty for someone to acquire CUV for the time being when you see companies with an even higher degree of uncertainty being acquired.

Personally I am hoping CUV will get to carry out their growth plan over the next three years and see the share price increase that way as a result. But if a solid offer comes in the interim of that, it's not the worst outcome either.

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LegendInMySpareT...
Posted on: Dec 4 2019, 12:13 AM


Group: Member
Posts: 15

If an aquisition was to happen I am wondering what an offer would look like, considered CUV has a FDA approved drug, no debt and projections of great growth in revenue and earnings ahead of it.

Audentes Therapeutics was just acquired today by Japanese Astellas, with a 110% premium to the previous SP closing price at a value of 3B USD/60 USD per share. On a very high level comparison, they don't have drugs further than clinical trials, no revenue and EPS of -3.99 USD (losing -129M last financial year). https://uk.finance.yahoo.com/news/japans-as...-042215248.html
The drug furthest in their pipeline also is for a rare disease: "Only about 40 boys are born in the United States with the condition each year, so that would yield just $80 million in revenue, said Jefferies analyst Stephen Barker, assuming a maximum price tag for the treatment."
"The $3 billion acquisition price is therefore more likely to be mainly predicated on the firm's technology platform and manufacturing capabilities," Barker wrote in a note."
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LegendInMySpareT...
Posted on: Nov 26 2019, 10:10 PM


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Posts: 15

I am not a technical analyst, but if the gap is considered closed only when the SP hits at or below the SP the day before the FDA approval , then we still have a little further down to go as closing price was 28.09 AUD on the 8th of October.

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LegendInMySpareT...
Posted on: Oct 28 2019, 11:35 PM


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Posts: 15

It wasn't just mentioning of the "GAP", with the comments in here it was pretty clear that many (incl. all the people taking profits on this board) were expecting a drop following the spike on FDA approval.

For instance Verharven posted a graph with the average development in a stock price leading up to an FDA approval, which clearly shows an immediate decline in the weeks after the approval spike.

That graph showed an average increase of about 40% on approval day and then a steady decline in the days and weeks after. Seeing that CUV went up 60% on the day (ie. more than 50% above the average increase) it's only natural to see a larger decline in the short term. Looking at that graph (Verharven could you repost please), it seems to me that CUV is follows that pattern although with more volatility (larger spike - larger drop).

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LegendInMySpareT...
Posted on: Oct 24 2019, 08:54 PM


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Posts: 15

Several people have referred to November being a good month on average, but looking at the historical averages that is only really created by Nov. 2010 where the stock went up 792% according to shortman's seasonality graph. https://www.shortman.com.au/seasonality?q=CUV

Seeing that's a clear outlier it probably makes sense to discount that performance, looking at the other years the average return is -1.32%.

I am no specialist in technical trading and algo trading etc, but it seems to me that it might be a bit optimistic thinking that these type of traders won't be able to discount an abnormal return that happened once, 9 years ago? Or am I wrong?


PS: I am long in CUV since 2016 and have increased my position steady ever since, and have strong faith in a bright future for the company. I am just curious in why many on this board put such faith into November historical numbers.

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