RE:RE:RE:Untangling the Beta-Amyloid Oligomersfrom pg 23 of analyst report:
Our discounted cash flow (DCF) model uses a 15% discount rate and a 2% terminal decline rate. Ultimate probability of success is estimated to be 7%.49 This is a downward adjustment to Phase I success rates of between 10% and 14%50,51. This recognizes that manufacturing efforts have started but have not yet been fully implemented and that the IND application has not yet been submitted or cleared. Our model reflects dilution from exercise of options and warrants. Based on the assumptions described and after adjusting for shares, restricted stock and options outstanding, we generate a target price of CAD$7.00.
As I read it, it seems to imply that there is a 7% chance of success based on historical analysis of similar companies. This is multiplied then by the target price of the successful company ($100 pps on a fully diluted basis w/ warrants exercised) to get a current valuation of $7 canadian pps.
pg 23 of the report explains in further detail, including estimates of market size, share, operating costs, licensing arrangements, etc
bottom line: I am interpreting this $7 valuation as what they think the company is worth today and where the stock is heading in the next 12 months. As that probability of success goes up (with more progress) or down, then the valuation will change proportionally.
just my opinions/interpretations.
I currently have 18,000 shares and probably won't buy more or sell any for a while.