Biotech Values

[DewDiligence]

Re: AQB valuation

The latest financial statement is as of 6/30/16 (http://phx.corporate-ir.net/phoenix.zhtml?c=197553&p=irol-newsArticle&ID=2189270 ), but there is enough information to fill in the blanks.

I estimate that AQB had ~$28M of cash (and no debt) at 12/31/16. This is based on $1.9M of cash and $5.0M of debt at 6/30/16; estimated operating cash burn of $3.9M during 2H16; and $35M of 2H16 financing proceeds from XON: $25M from the issuance of stock and $10M from the conversion of debt.

Following the 1:30 reverse split in Jan 2017, AQB has 6.46M basic shares outstanding. For valuation purposes, I assume 7.0M fully-diluted shares, and I use the (conservative) non-treasury method of accounting for options in which no credit is given for cash to be received by the company upon option conversions.

At the 12/30/16 closing price of $8.88 (adjusted for the reverse split and the pound-dollar exchange rate), AQB’s enterprise value was about $62M-$28M = $34M.

The latest AQB quote I see on nasdaq.com is $24.00, but this price may be an artifact insofar as today is the first day of Nasdaq trading and the ABTU.L closing price today (on the AIM/London exchange) was 1400 GBp, which equates to $17.27 at the current exchange rate. If the $24.00 Nasdaq price is legitimate, then AQB's current enterprise value is about $140M.

In any event, AQB is a pretty cheap stock if one thinks (as I do) that fish farming has a bright future and that anti-GMO fears can be overcome.