mercedesman wrote: Not bad for a valuation newbie G !
It's as good of a guess as any.
here's a 2024 link suggesting closer to 7 as a multiple ( for Biotech industry)
https://eqvista.com/revenue-multiples-by-industry/
There are various methodologies to skin the valuation cat but the good news is that they all seem to yield a minimum of a 4 bagger all the way up to 20x or even much higher !
Paradigm prefers to forecast cash flows out 10 years and then discount them. The higher the rate the lower the " value" today
Using 15% for example yields a much lower value than using say 12 or 10% ( I dare say a more fair rate)
While they admit their analysis is probably conservative they can foresee valuations up to $4-$5 CAD
Here are some further considerations for you to mull over :
1. How much higher is the revenue target ( over the $2B USD projected by Spectral) if one considers the missed CDn revenues, or EDEN label expansion ( eg perhaps Docs will initiate PMX at EAA = .5 ) , or the use of more than two cartridges per patient ( proven in studies to be warranted in some situations eg infection source takes longer to tame), or a higher price per cartridge than Spectral is currently assuming ( as for example would be warranted by a mortality benefit that exceeds expectations), etc., etc.
And what of international EAA revenue assumptions post FDA approval of PMX with the companion diagnostic ?
2. To be fair, further dilution could be expected. That's why I often use 350 million or 400 million shares fully diluted.
3. Spectral will only control US and Canada rights until 2039 I believe. However projecting revenues ( and discounting same) beyond 2040 is not likely to materially impact the numbers.
4. David and Goliath negotiations may require Spectral to leave a bit more "future growth potential " on the table than might otherwise be the case. Although some very small entities that have cracked tough nuts and have achieved very fair valuations ( in relation to norms and historical valuation multiples )
So myself personally, I hope for a valuation of between $5-$7 CAD /sh.
That assumes some very good Trial results, rigorous & successful negotiations, and a recognition/acknowledgement ( by the buyer) of upside revenue possibilities.... and the importance of the companion diagnostic to this personalized medicine approach, in order to once and for all meaningfully reduce the mortality rate from Sepsis globally.
MM