NAVB Oldtimers Lounge - Share Price SWAG Comparison for Private Financing vs. Partnership Deal on Navidea RA Diagnostics -- - NAVB Oldtimers Lounge - InvestorVillage
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Msg  16335 of 16343  at  1/19/2020 6:16:16 PM  by

moneyonomics

The following message was updated on 1/19/2020 6:37:34 PM.

Share Price SWAG Comparison for Private Financing vs. Partnership Deal on Navidea RA Diagnostics -- both options project a compelling strong win win, but type of financing advantage shifts..worksheet

  
           
The following is a SWAG Share Price Comparison if/for successful RA diagnostics trials between Private Investor Financing of remaining P2b thru NDA trials vs a near term Partnership Deal. 
 
The following SWAG share price projections are calculated (caveat: all calculations are a SWAG based on economic assumptions presented and should be viewed only as possibilities and not probable outcomes):
 
-using 15 year shelf life for RA diagnostics with maximum revenue of ~$500mm per year
-SWAG uses 3 times cash flow to project upfront cash for each percent of a partner deal (plus proportion of 2b thru NDA trials and all marketing costs) ie tilmanocept for RA is valued at 12% cash flow/NPV return for a deal  considering tilmanocept/LS already safety validated, LS is successful and growing and RA trials to date successful
-share price projections are based on Standalone SWAG Base Case 1 economics presented in post 31307 (reposted below with some minor adjustments ie 40% Ptr deal rather than 33.3% deal and corrected 20%/25% upfront cash calculation) adapted from original post 31303
-SWAG 1 Base Case Partner deal economics partner takes over all marketing and all associated costs 
-SWAG share price projections start with a 100% private financing share dilution using 30.1mms shares out (20.1 mm at time of this post) 
-SWAG presents a partnership deal at 6 example levels of partner participation.
 
-The SWAG share price comparisons present
   ----the annual cash flows over 15 years for both private financing and a partner deal
   ----each years cash flow extrapolated at 5x multiple (15 year cumulative NPV is also presented as a reference).
  -----the 5x multiple only achieved for successful RA trials thru NDA.
  -----RA Standalone (only product Navidea has in near term pipeline) economics would   more likely trade around 5x multiple, wheres 10x, not presented below)  could be achievable as more products mature thru the pipeline  
   -----under each partnership participation level example a share price differential is presented as the gain or (reduction) to shareholder share price between a 100% private investor funded ownership trial to each of the partner deal ownership levels. 
 
 
The primary observation from the share price SWAG results at 5x multiple is:
 
-Standalone SWAG share price for both 100% private financing and at each partner ownership level is very compelling
 
-At around the 40% partnership deal level it becomes more beneficial to self finance the remaining RA diagnostics trials with private equity than to JV the remaining trials (based on a near term JV. If JV pushed further into future then partner deal level advantage shift could change)
 
 
 
 
  
Worksheet above and graph posted on public board No 31320 based on Base Case 15 year Shelf Life Economics worksheet in POST 31307 on public board for UPDATED Base Case 15 year ECONOMICS WORKSHEET
and post 31303 on public for original assumptions and 10 year economics
 
The following SWAG economics are presented for a possible RA diagnostics deal,  which demonstrate public deals presented would not represent the full value of the SWAG RA diagnostics potential, which has strong value by already approaching a P3 with strong historical and current safety results. 
 
The RA SWAG uses the following assumptions:
 
-RA diagnostics economics calculated as a standalone deal
-uses 8% discount rate in calculating NPV and IRR economics
-generates $500mm a year gross revenue/sales as projected by Navidea
-goes on market mid year 1 of NDA approval for economic
-uses a 15 year shelf life for economics, with a 7 year decline tail
-takes 2.5 years to reach full $500mm year sales potential
-manufacturing-operating and G&A costs are 27% of sales, marketing is 10% of sales
-P2b thru NDA development costs projected at high range of $25mm gross to bring RA diagnostics to market
-in any JV partnership the partner takes over all marketing
-in a JV the partner will make an up front payment to Navidea at 12% net cash flow or 3 times 100% NPV for Navidea and will reimburse Navidea for development costs based on partners ownership percentage
-SWAG's presented
   ----SWAG first projects Navidea NPV and IRR at 100% ownership
   ----SWAG is further broken down to project Navidea NPV and IRR at various levels of dilution/divestiture to a JV partner  
   ----SWAG 1 Base Case variable is Navidea pays 0% of marketing costs in diluted NPV and IRR
 
In summary, what SWAG economics project is a dilution in NPV to Navidea shareholders at 3 times cash flow or 12% of net cash flow upfront payment, plus partner pays proportional trial costs and all marketing costs.  So question from a shareholders perspective is it better to:
 
1. dilute RA NPV to current shareholders indirectly with further private share dilution of another 8 mm to 10 mm shares to bring RA diagnostics to market and retain 12% of cash flow, then enter a JV to fund only new developments post RA NDA, which will delay major therapeutics and CV diagnostics development into late 2021, or
 
2. dilute RA NPV in P3 phase, which directly reduces RA NPV to current shareholders for a 12% deal upfront from a partner which provides concurrent funding for  therapeutics and CV diagnostics starting in mid 2020 using upfront paid, plus some additional  partner development funding? 
 
That is a decision BOD will make, but appears there is no need unless for retaining  NYSE-A listing, for an immediate JV dilution for anything less than a 12% deal of projected net cash flow upfront, which again significantly exceeds other public deals so far identified (see 10% dilution as an example of upfront value at a 12% deal or 80% dilution deal to proxy latest deal posted).
 
 
 


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