Taking a close, detailed look at Dare possible valuation: (it’s long because proper D/D = safer investments. If you feel lazy it's too much for you, just read the bold letters…)
Dare is a clinical stage biopharma focusing on women’s health with existing partnerships and sponsorships in place with Bayer, the Kennedy-Shriver institute and the Bill Gates fund.
It has cash and is comfortable financially. It doesn’t have a “shorts” issue.
It has a business minded CEO (as opposed to a scientist with little managing experience as we see in other such companies) with a proven track record of results and acquisitions (and working at a low salary without resorting to fluff).
On December 7th it received FDA approval for its first drug candidate (in its first try): Xaciato (for bacterial vaginosis). This product is best-in-kind, it is easier to use and apply, more efficient and produces less side effects.
It has a 1 billion dollar market with its most direct and best competitor owning about 10% of the market (and DARE’s product is superior in every way to this product). All other competitors have smaller market shares and are even more inferior.
DARE is actively working on a distribution partnership and an announcement about this partnership is expected ANY DAY.
The most probable scenario gives DARE some money upfront and commissions on sales. Since Xaciato has several advantages over current treatments, the value of a long term deal should be in the hundreds of millions of dollars, because a big partner can look forward to a 200 to 500 million yearly revenue down the line. But matter of fact, if DARE can report by the end of 2022 a 50 million revenue as a result of the deal/commercialization, which seems highly likely, it would be a huge number for a company currently valued (with zero revenue) at 115 million.
What does this mean in terms of real stock value? 50 million in revenue would immediately transform DARE into a PROFITABLE company. Meaning it would cover all current costs plus leave a profit. It would go directly from no revenue at all to profitable.
So how much would DARE be worth with profit from 50 million actual revenue (considering a high end 36 million costs per year)? Instead of just “guessing”, let's use a real formula, which is commonly used to evaluate the intrinsic worth of company's stock:
(eps) x (1 + 5 year estimated growth %) x e/p ratio
The EPS will be .18, we set the 5 year growth at 300% (considering that by then DARE should be enjoying the full revenue potential of Xaciato plus revenue from Ovaprene, another of its advanced pipeline products, and probable income from similar deals for any of its many pipeline’s products, that is a modest number).
Using those very modest estimates, this would come up to 6. The stock price value would be 6. That is the value for the one product alone, not including whatever value we assign to the rest of the current pipeline. So if the entire rest of the pipeline would be worth $1.5, meaning, roughly what it in fact is worth today, minus it's approved product, the very low estimate would be a share price of $7.5.
Does this mean we actually see DARE go from under 2 to above 7 in 2022? There is no way of knowing. It depends on so many things and stock prices most of the time are crazy and irrational. But it does mean that relative to what it is worth today, considering a very moderate success commercializing its 1st product through a large partner, DARE's stock is extremely undervalued at $1.5 and has the potential for a 200% plus growth within 2022.
Now, all this is true really when looking at Xaciato sales and the current value of the pipeline. But the pipeline itself is ongoing and its value should increase. Let’s look at the future catalysts we should expect for 2022
Ovaprene
It’s imperative to understand this product to get a notion of how the stock will benefit from news here.
Ovaprene is a hormone-free contraceptive with a high rate of effectiveness. It is a product sorely in need for a huge market of over 4 billion dollars. Currently, most effective products for women use hormones. Hormones cause very unwanted side effects for women, including menstrual bleeding, irregular periods, mood shifts, long waiting times after discontinuing the contraceptive before the body goes back to normal and all these don’t include the risk of tumors and cysts as a result of the hormones.
Products not using hormones are either clearly less effective (which is a huge issue since effectiveness means not getting pregnant) or the use of a copper IUD which causes several side effects, mostly long term bleeding/spotting, plus risk of copper contamination.
Any news about Ovaprene should spike the price because this product has a much larger market than Xaciato (at least 4 fold). The news we are waiting for throughout 2022:
- IDE application (to be announced ANY DAY). Basically means that DARE (with Bayer as its partner for Ovaprene!! ) requests from the FDA approval to use the device women will insert to avoid pregnancy in a Phase 3 pivotal trial.
Important to understand: a Pivotal P3 trial means that if the trial goes well, its data is used to request a new drug application. So this is the last stage prior to requesting final approval.
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FDA approval for the IDE (normally automatically approved within 30 days of application)
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Start of the trial (hopefully within h1 2022). This is when the trial is set up (here we have the important help of the Kennedy-Shriver Center which is sponsoring most of the trial's costs and infrastructure).
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First patients enrolled (not all bio pharmas release news about this).
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Initial data. Will we get any during 2022? It's a big question and would be a HUGE, HUGE catalyst. Hard to say. The trial itself requires participants to participate for 12 months. Which means the trial should take about 2 years to complete, because not all participants start at the same time, and then you need time to analyze the results etc. But, after a few months, initial data can be made available. Such that indicates the company will see the trial through because that initial data is promising. Of course, a company doesn’t just perform a trial and then after 12-18 months looks at results. It is constantly checking to see if the results warrant the trial’s continuation. Preliminary data also helps a company shop for partners and deals. So DARE could release initial data during the 2nd half of 2022, probably late Q4. It would make sense that it does. Positive data would be a massive, massive reason for the stock price to go up big time.
All in all, the trial could start early 2022, ending early 2024. We can hope for NDA application for H2 2024. Can’t possibly hope for that in 2022, or 2023. It’s just too fast.
But, we could hope for spikes amounting to 20-30% based on points 1 through 3. And a 30% spike would be a moderate result for a point 5 news release. If that is added up to what Xaciato (the drug already approved in December) can generate, including quarterly reports producing positive earning results, it strengthens the notion of seeing a 6 within 2022.
Sildenafil:
Dare has taken the active ingredient in Viagara to produce a gel that can be used by women to address Female Sexual Arouse Disorder (FSAD), which is in essence the same as erectile disorder in men, except without the embarrassment.
So this is women’s viagra and there is no current drug like it in the market. Lets understand where we stand:
After a phase 1/2a trial was completed with positive data, a Phase 2b trial followed and in principle, ended December 15 2021. We now await data and news about a Pivotal P3 trial.
In theory, Sildenafil could be huge. Positive news about the P2b trial and plans for a pivotal p3 could be amazing. We need to hear the results to see how big and what impact it will cause. But if DARE can pull off Viagara for women, it’s a whole new ballgame.
HRT1 for Menopause Hormone therapy
This one could provide a nice surprise. First to be clear: this is not a drug, it’s a delivery system. What this means is that Dare came up with a way to deliver existing drugs in a more efficient way.
In this case, it is meant for treatment of menopause symptoms. This is done through hormone treatment (HT). The ability to deliver the hormones at a more precise rate and dosage improves the results and causes less side effects.
A phase one trial was conducted in Australia and got positive results. What is important is what follows:
Since this is a delivery system used to deliver existing, approved drugs, DARE is seeking the 505b2 pathway for FDA approval. What this means is that DARE will use the data that already exists in regards to the drugs themselves and add to that the success of the delivery system to try to get approval.
So a very good surprise would be that the FDA granted Dare the 505b2 path. Otherwise, they would need to announce another trial. Approval of the product through 505b2 would also give DARE exclusivity for 3-5 years. A bonus.
Unclear when we could hear any news about this. Could be a game changer for the entire 2022 perspective. An approval of the 505b2 path opens the possibility of this product being the next product to get full FDA approval, ahead of Ovaprene or Sildenafil.
VVA1 for Menopause symptoms and breast cancer discomfort
Ok, first, what is this product? Women in menopause, and women who have or had breast cancer, can suffer from vaginal discomfort (basically vaginal dryness which is a problem for sexual relations and also can itch, etc.).
The treatment for this, which is called vulvar and vaginal atrophy, is using estrogen. So, it’s based on hormones. Dare with VVA1 is exploring, again, an existing drug used for multiple treatments, including breast cancer, called tamoxifen. Since this is not hormonal treatment, women who have had or have breast cancer could use this. Because they cannot use the hormonal treatment for their vaginal atrophy, because it is not recommended for those women who had or have breast cancer.
Of course, the market is huge because there is no such treatment today, and it offers an alternative, hormone free treatment for millions of women with that menopause symptom plus an new alternative for women who as a result of breast cancer had poor treatment options.
In late September, DARE announced the beginning of a Phase 1-2 trial. It is unclear how long this trial will be, but apparently, not too long, since the women participating will need to take the treatment for a total of 8 weeks (2 month). So a 6 months total trial would seem reasonable.
Positive data leads to a P3 trial here.
It’s important to note:
Any of these p1 or pre-clinical candidates can result in news about a partnership such as the one with Bayer. These products all address unmet needs or 1st in class drugs to some extent. So all of them add some value to DARE.
Conclusion:
DARE is an extremely undervalued preclinical biotech company in great financial shape and excellent leadership, with a recently approved drug and several strong candidates. Since its focus is on using existing drugs (used outside the women's health sector) and adapting them to women's health unmet needs, the approval process of all its pipeline is considerably shorter than for other biotech companies.
With really very little downside and amazing potential, it seems like a very good ticker to add, definitely at the current price.
I have had a position for some time and I have sold several times when prices went up then bought again in dips. My position is extremely big (over 250000 shares). Personally I like the company for its transparency, no BS attitude towards investors, and that it is very business-minded (and not focused only on the science). I have studied it in much greater detail than what I wrote here.
If markets remain slow like they have been in 2022, I still expect it to peak at 4 at some moment this year. If markets gain traction and become really bullish, a sudden peak that hits 6 seems real to me. I am not an advisor, have no formal education for giving financial advice and think that investing in stocks comes with high risks.
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