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Post by rak5555 on Apr 10, 2014 7:51:08 GMT -5
H - I'm glad we agree that MNKD valuation s/b at least 7 and you make excellent point re: dilution. However, I still feel there is room for higher share price based on shift in likelihood of approval. I'm sure my algebra is rusty, but I'm thinking the following:
Assumptions: Share price upon CRL = $1; Share price upon approval = $13; Share price in June-August = $7; Share price today $8.50 (adjusted for dilution) Solve for X where X = probability of CRL
(X*$1)+((1-X)($13) = $7 X = 50% Interpretation: In June-Aug the market assigned a 50% probability to a CRL and 50% to approval
(X*$1)+((1-X)($13) = $8.50 X = 37.5% Interpretation: Today the market assigns a 37.5% probability to a CRL and 62.5% to approval
If you assign an 20% probability to a CRL and 80% to approval you get a share price of $10.60
And of course all this has to be adjusted for labels and cash flow and future dilution. This is just for amusement.
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Post by babaoriley on Apr 10, 2014 9:10:25 GMT -5
rak, had I just inhaled a substance that is now legal in Colorado and Washington, my only comment to your calcs would be, "Oh, wow!"
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Post by harshal1981 on Apr 10, 2014 11:00:32 GMT -5
Rak:
Let me tease you a little :
(0.20*1)+(1-0.20)*X=8.50
Assuming market is reflecting 20% chance of CRL and 80% approval now, what will be the X - price after approval :-)
I like the way you came up with the equation - and this is really also for amusement ... There is now way to assign % to CRL or Approval from Market price. All I know is that good chunk of major money comes after certain degree of confidence. After AdCom we are in that zone but after FDA approval is when we will see more influx and after first quarter sales data (assuming the curve is good), we will see even more influx of money being safely "parked" in MNKD for a multi-fold appreciation over a period of 5 years or 10 years.
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Post by rak5555 on Apr 10, 2014 13:27:59 GMT -5
I have a feeling I will regret this answer, but $13
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