I thought that my valuation post was bullish.If we assume that if all goes according to plan, that the share price goes to $10, and that the other assumptions below are reasonable, then the expected share price is $5.78.This is almost 3 times the current price.How many stocks can you say that about?Remember that the $5.78 is risk adjusted and that there were some conservative assumptions used to get to the $10 share price.
For those with a math background, here is how I got to $5.78. Of course if you do not agree with my assumptions, you can change them or let me know and I can put them in my spreadsheet and re-post.
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P = Event of Finding a Partner (Includes other Commercialization Risks)
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~P = Event of Not Finding a Partner
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F = Event of FDA Approval
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~F = Event of Not Getting FDA Approval
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P(P|F) = Probability of Finding Partner Given FDA Approval
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Assume P(~F and P)
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0%
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Assume P(F)
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85%
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Assume P(P|F)
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60%
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Assumed Share Price if F and P
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10
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Assumed Share Price if F and not P
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2
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Assumed Share Price if not F and not P
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0
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Assumed Share Price if not F and P
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N/A
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P(F and P) = P(P) = P(F) * P(P|F)
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51%
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P(F and ~P) = P(F) - P(P)
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34%
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P(~F and ~P) = 1 - P(F)
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15%
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P(~F and P)
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0%
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Expected Share Price
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5.78
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