CDY 4.76% 22.0¢ cellmid limited

New Baillieu Holst CDY valuation

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    Baillieu Holst has increased its target price for CDY to a range of between 8.0c to 30.0c per share (representing a valuation range for the company of $58.8 million to $220.7 million). 24 Baillieu Holst Report Cellmid Limited.pdf

    Since the financial arrangements for the recent Zoetis agreement have not been disclosed they have not contributed to the valuation result. Nor has any allowance been made for the Quest/Celera and Fujikara Kasel diagnostic agreements currently awaiting finalisation.

    The analysis notes that Zoetis is currently under pressure to bring new products to the market, with companion animals being a growing market opportunity. The added value of the Zoetis deal for Cellmid’s other human licensing opportunities has been commented upon.

    Success with Zoetis could open up other doors. We believe that if the Zoetis option converts into a licence then other human licensing opportunities may emerge, given the homology between animal and human midkine and the de-risking that animal studies would present to a potential licensee in human applications.”

    The analysis indicates that the current target price range has the potential to be re-rated during 2015.

    “We see a number of potential re-rating events coming up over the next twelve months, including:
    • A pre-IND meeting with the FDA on the anti-midkine cancer programme;
    • Commencement of the Phase I/II;
    • First revenues from Pacific Edge related to the bladder cancer diagnostic;
    • New distribution agreements for évolis; and
    • Early clinical work on midkine in alopecia.”

    The potential seen for Cellmid’s CAB102 immuno-oncology therapeutics program is informative. It provides some idea of the size of the playing field.

    “We assume that the cancer antibody licences in 2015-2016, for US$10-20m upfront, US$100-150m milestones and 10-14% royalties. We assume that the products launch by 2018-2019 and model peak sales of US$1.7-$2.2bn.”

    I reiterate the point that I have made in another thread that these exercises represent a fundamental valuation of the company and are not proposed as predictions of market prices.

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