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Hi all,

I am very much the novice at evaluating biotech but I've taken a crack at valuing StaphVax (assuming, of course, it is approved for sale).

Not sure where I read it (maybe at Nabi's website) but the market for end stage renal failure is pretty small, even if that population requires a booster shot every 8 months. Something like 45,000 new patients per year and a total of 85,000 in the US. Assuming EU has a comparable # of dialysis patients and the drug sells for $100 per shot that is just $255,000. Hardly worth the tens (hundreds) of millions invested in the development effort.

Obviously the big profits would come from the much larger surgical, trauma & burn, neonatal, immune compromised populations which Nabi is estimating at 12 million in the USA. Again assuming the EU has a comparable size market and the shot is $100 (and again assuming 100% of population receives the shot) then revenues from StaphVax could be $2.4 billion.


1. Am I about right in these market sizes?
2. What kind of sales force does Nabi have, or are they going to have to partner with a big Pharma?
3. What kind of net margin could we expect from the StaphVax product?
4. What percentage of the target market will be eligible for StaphVax and how many would already have received it because of prior hospitalizations?
5. Does anyone know when StaphVax would go off patent? I see they have some patents that issued in 1999 and 2003.

Any insights would be much appreciated!

I ran a net present value calculation using a introduction date of 2005 for EU (about 100,000 shots in first year) with US coming on-line the following year and number of shots growing over 10 year period to represent 20% of the target market. I assumed a 30% net margin. I did grow the patient population by 2% per year and the drug price by 4% per year also. I then assumed that the number of shots declines by 50% when the drug comes off patent in 2025.

Using a 15% discount rate I get a NPV of Approx. $700 million for StaphVax. Add this to the $890 million that values current cash flow at 17x (according to MF "snapshot") and you get a market cap of nearly $1.6 billion or 80% above current valuation. The ultimate market penetration and the rate of growth to that market size are key drivers to the valuation. I'll try to post the data table if I can figure out how to do that.

Thanks for any input


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thanks for the calulations. however, a couple of corrections in market size. the number of patients requiring dialysis in the united states is currently greater than 400,000. fairly good estimates place that number at around 2 million by the year 2030.
these patients are amazingly prone to developing all types of infections; some of the most life threatening and most damaging infections are staph aureus.
additionally, many other patients who have catheters for other reasons (i.e. cancer patients receiving regular chemo injections, sickle cell patients requiring frequent transfsions) will also contribute to the patients benefitting from this potential vaccine.
overall, i think the numbers are much higher than what you have calculated above
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not only that but staph infections are the major killers in hospitals and are increasingly antibiotic resistant. If this stuff is what it says there is great potential for any surgery patient

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Thanks for the feedback. I did use a 12 million patient potential market in my analysis (plus another 12 million in the EU). However, I assumed a fairly slow adoption rate and an ultimate penetration of only 20% (so starting at zero and trending up to 7 million doses by year 2022). Even with these conservative estimates StaphVax is a $1+billion blockbuster.

Yes, I agree this is probably conservative but I think it gives a start for valuing NABI. I ran a case where the drug reached 60% of the target market and got a NPV of $1.8 billion plus whatever you value the current business at.

When I run an aggressive model with rapid adoption I can get a NPV of over $2billion (which, by the way grows to over $6 billion by the time full sales figures are reached), again those figures do not include the value of the current business and other pipeline opportunities.

I am long NABI and think the stock is very attractive at these prices, understanding the risk of a setback on the regulatory front. However, that risk is very much mitigated by the successful Phase III trial already completed and the apparent greenlight from the EU. I am definitely considering purchasing more stock, just trying not to "fall in love with the story"!!!



FD: Long on NABI
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Regarding your calculations, I think you have significantly undervalued your market. By focusing solely on hospital use, you have neglected the enormous market of out-patient and elective surgical procedures done every year, both here and abroad.

For instance, when you visit your dermatologist to have a mole removed, you are not sitting in a sterile surgical environment. While having a mole removed might not sound like "surgery", it is. And, by being in a non-sterile environment, you are more likely to develop staph aureus (or God knows what else), as a result.

For my dime, if a staph-aureus vaccine was available, I'd pay the cost and protect myself prior to the procedure, even if it was not covered by my insurance.

Staph-A is an nasty bug, and anyone with a compromised immune system is both more susceptible and in extreme danger if they contract it. It's no picnic for healthy people, either. I'd much rather cough up $100 and avoid an extended hospital stay (heck, it's worth $100 just not to have to eat the food!).

Any private physician performing elective surgeries would be well-advised to recommend such a vaccine, if for no other reason than to keep the cost of his malpractice insurance down.

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