Lantheus Holdings
$LNTH is a cash-rich company in the growing field of radio-pharmaceuticals
It’s notoriously difficult to analyze biotech companies. Most of them operate with a long-term perspective, where the success of future drugs can be highly uncertain and difficult to predict.
To value such a company requires specialized knowledge that the non-scientist does not normally possess. We therefore look for companies whose (low) valuation is only justified by conservative estimates of the cash-flow generated by existing, proven drugs on the market.
The goal is to eliminate as much as possible any “guesswork” about the company’s future performance. We want the company’s pipeline as an option, for free. If the pipeline fails our downside is limited since the investment was based on tangible cash flows. If it succeeds, we capture the upside without paying much of a premium for it.
Heads I win; Tails I don’t lose much.1
This is how we think about $LNTH.
The company is currently trading at a compelling valuation of 14.6x 2025E EPS, per our estimates. We believe these are conservative estimates since we forecast zero growth for the drug PYLARIFY in 2025, per management’s comments, in addition to no growth attributed to DEFINITY.
We also maintain the same amount of revenue for Strategic Partnerships between 2024 and 2025. Therefore, this does not include any additional revenue that will come from FLYRCADO, when it begins sales in 2025.
Full report below.
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“The Dhandho Investor,” Mohnish Pabrai.