Amarin Corp Plc (AMRN)

[Leonard McKinley]

It is obvious that using a substantially lower discount rate will result in a much higher price. I can do it of course, but I will not bother. First, any "average group" discount rate that some academic has inferred is an average and therefore benefits from the diversification of the averaging. The primary point is that any individual security has specific risk which is attached to its individual, non-diversifiable, risk. Therefore, it is entirely possible for one "biotech" to have a specific risk of 18% and a group of biotechs to demonstrate group risk of 12%. Those are apples and oranges as they say.
Secondly, suppose my discounting at 12% yields a price of $35. Well, whoppee! Another way to say that is that you do not think that my 18% discount rate is appropriate and that your discount rate is appropriate, and that therefore the stock is under-valued, in your opinion. That is perfectly appropriate. If you think my rate is too high or if you think that my terminal patient base is too low, or whatever, then you think the stock is under-valued. I have just told you what the market thinks. As a buyer, or seller, it is your right to differ with the opinion of the market.
Finally, this is exactly why I do not care to discuss this stuff and why I generally do not comment. It just ends up in a circuitous discussion of fanatic bulls asserting I am wrong. It is not I who is speaking, it is the market speaking and I am just translating it for you and me. The market is usually not stupid. You can run your own numbers and make your own assumptions and decide what you will.
For me, I am long the stock for exactly the reasons that I cited. Very simple. (Oh, by the way, please don't quote some academic in order to try to impress me. My academic credentials are the same. I am not taking offense. I just don't care.)