Some random thoughts on valuation..., page-2

chance of phase 2 success (80%)

Thanks for that. A couple of quick questions:

1. What's the basis for chance of phase 2 success being 80%? Based on historical averages, Phase II has the lowest success, with only 30.7% advancing to Phase III.

2. What methodology have you used for the risk adjusted MC? Deal size multiplied by cumulative probabilities? While I may sounds critical on the % of ph 2 success, I am quite bullish here and I suspect the valuation would be higher if you did a DCF and then risked the NPV of the cash-flows as a takeover deal of $300m is extremely unlikely. Suspect they'd be looking to farm down some interest but retain a royalty on future sales. 

Anyway, given Phase II has the lowest success, expect a major rerate on success in a few weeks time.

Cheers, 

5x8's