Innovation Pharmaceuticals Inc (IPIX)

[frrol]

Buyout unlikely but nevertheless possible. Buyouts are typically done at a premium, since (in finance terms) the acquirer should be assigning an additional, terminal value to the future potential discounted cash flows, which the market tends not to do for a target company presumed to remain independent. (Another way to think about it is that the acquirer tends to compensate the target's owners for dionne remaining upside.)

A common approach is to look as the 'recent' market cap high and offer that or something just above it. Our fully diluted high was about $800MM in 2014. That would mean about $3.80 today. But investors who bought around the highs would of course want more. If the acquirer is really hot, we could see $5 with this thinking. However, if our pipeline is readily attractive to the acquirer strategically, the premium could be huge and we would see up to double that. This is assuming BTD and really strong P results.

Do not expect any buyout, let alone $10 or it happening in the next two months. Just keep your eyes on news and stay objective about our pipeline and investment. Most likely scenario is we get back to $.70-$1 in the short term with a deal.