TS03 Inc Trust Units TSTIF

Technology Value??

[StocksFTB]

The cost to bring an investigational new drug  to market is around $800m USD and it takes about 12 years from concept to market.   The regulatory process for medical devices is shorter and has been estimated to take between 3-7 years from concept to market.   A 2010 Stanford University study suggested the cost to bring a medical device to market ranged from $31m USD to $94 million USD.  Although the high end of the range of $94 million is for a PMA I would argue that the new product code for Tso3 and the significance of the technology suggest the upper end of the range is more valid than the lower end.  If you assume that it would take you 7 years from concept to approval and assume a 10% required rate of return (lower than discount rates most analysts are using in their DCFs)to get your product approved and a $94 million dollar initial investment the future value assuming you get your approval is 183m USD(1.1^7 *94 million).  TS03 also has about 17 million in cash so add that to the 183 and you get a 200 million dollar USD value at 1.26 exchange rate that is a 253 million dollar market cap or about $2.75.  I would argue that the market cap of Tso3 reflects technology value and not the upside from the tremendous opportunity ahead of them.   IF management can execute on this opportunity the stock will trade dramatically higher, but at $2.75 you can argue that you aren’t paying much for execution you are just paying for technology value to get from concept to approval for a product that is already approved and best in class and potentially getting extended claims driving even more technical superiority.