RE:Determining a Company’s Value - Old School
Gorf79 wrote: Fred, since you didn’t ask I’ll provide it free of charge.
There are two characteristics to analyze when valuing a company and determine whether it is a worthwhile investments: there are Quantitative and Qualitative factors for review;
The Quantitative stuff, the hard stuff that scares people:
Simply blend in things, in no particular order, like probability of success, future cash flows, discounted cash flows, NPV analysis, shares O/S, cost of capital, earnings multiples, manufacturing costs and those costs to distribute the treatment etc. etc. and vooula you will eventually come up with a price per share.
The Qualitative stuff, equally as hard, maybe harder to nail down:
Does the company openly promote to maximize shareholder value and mitigate dilution, do they communicate in a concise and coherent fashion that is shareholder/market oriented, do they have IR on staff, are IR active or recluse, do they return calls/emails, does the company provide regular updates, do they attend investor conferences or trade shows, do they have readily available analyst reports, do they provide investor presentations and newsletters in a timely fashion or on a regular schedule, do they promote on social media (Facebook, Twitter Instagram etc. ), do they hold regular investor calls, and to repeat point #1, Do they care enough to promote?
I think most here bought on a referral.
Sometimes a simple eye test provides me a better real-time valuation than any fancy/complex metrics. For an early stage small biotech, I like to focus on 6 factors/value creators, some of which are overlooked or less easily measured: 1) IP 2) development speed 3) company talent 4) minimal dilution 5) non-dilutive partnerships & 6) most important - data.
1) Our broad IP - no further comments needed.
2) Excluding data, speed is biotech's best friend. We've already taken a full bite of an expedited opportunity (fast track designation) & all company executive comments/data point to an even larger bite (BTD/AA) with further acceleration in the very near future. In the meantime, there's no reason to believe the company isn't utilizing all of the benefits provided by our fast track status.
3) Building talent is no less important, but can be even more challenging. While capital can always be accessed (friendly or not), talent/clinical development expertise is often in short supply. The recent management changes (moving on from Shawn & Mr. Trikola) & the recent hire of Dr. Vera created immeasurable value imo. Of course, Sherri M. has been a diamond in the rough for TLT & her licensing deal with the company is undoubtedly a very company/shareholder-friendly one.
4) We are on pace to possibly get an AA for a new single-agent SOC on such a limited/non-dilutive budget that few (if any) small biotechs have been able to achieve...Kudos to TLT....many millions in savings for shareholders.
5) Our partnership with Li Ka Shing Knowledge Institute & the CRA with PHAC should pay plenty of low/no-cost dividends for shareholders in the form of new drug development, commercialization & networking opportunities. While awaiting a BTD/AA, building a strong relationship with LKSKI can hopefully open more friendly doors to new partners who can better translate this science to a successful business.
6) Data - predictive probability of success looks promising to my eyes.
All imo. Good luck...